I received this email from Richard Karn, MD of SDI. Mr. Karn has...

I received this email from Richard Karn, MD of SDI. Mr. Karn has given me permission to post it on Hot Copper. I am simply passing the email along for informational purposes as well as for Hot Copper member feedback and comment. JRV shareholders and the general public need to be apprised of both sides of the story if they are to make an informed decision regarding the future direction of the company.
It is my understanding that Mr Richard Karn is going to distribute this letter/email to his shareholders. Specific questions should be directed to [email protected] or by phone to 0403 782 883

Dear (name withheld),
Thank you for sending me a copy of Duncan Pursell's letter of 19 April 2016.
It is complete nonsense, of course—and if anything it demonstrates Pursell is power-crazed and defaming us, not the other way around as he claims.
Here are two examples of Pursell misrepresenting the truth on just the first page:
Pursell misrepresentation #1:
“Over the last two years, four or five further ‘offers’ and ‘proposals’ from SDI have followed, unsolicited, untested and unverified. None has been of commercial or technical merit that would benefit Jervois shareholders; in our opinion, the only benefits from any of these ideas would accrue to the folk behind SDI.”
The truth of the situation is Pursell is twisting the truth to suit his needs.
What Pursell neglected to mention in his 19.04.2016 shareholder letter was SDI’s 18.04.2016 email response to his letter of 14 April 2016 (which he did include):
"Dear Duncan, Roger and Derek,
SDI has been able to advance 2 indicative off-take discussions and to secure a LOI for a US $20 m development round funding facility because we have conducted extensive market research and established commercial relationships with nearly two dozen scandium end-users over the last 4 years—work JRV clearly should have undertaken but by its own admission has not.

If JRV were to provide SDI with a 100-gram scandium oxide sample, we would be able to progress these off-take discussions, thereby dispelling not only your doubts regarding our legitimacy but also your excuses for not co-operating with us.
Please advise whether you are amenable to this proposal, which may also serve to put an end to the unpleasantness we currently find ourselves mired in.”
The time-stamped email is available on request.
Of course, Pursell has not responded to our email and instead sent out his letter to JRV shareholders the very next day fully cognizant of the fact he was thoroughly misleading his shareholders about SDI.
Further, it is certainly true that over the last two years SDI has brought JRV a number of offers because we were trying to work with the Board to fund putting the Flemington Scandium Project into production—because we believe in the project.
Here is a list of the offers SDI has brought Pursell and the Board of JRV; judge for yourself whether our offers have been of “technical or commercial merit”:
Unless otherwise noted, we can provide time-stamped emails documenting these claims:
In August of 2014, SDI offered to underwrite a rights issue to put the Flemington Scandium Project into production.
Pursell refused, effectively for fear of losing control of the company.
In October of 2014, we offered to purchase the Flemington Scandium Project for a fixed capital amount and a net smelter royalty—both of which were on better terms than those JRV received from the sale of the Nyngan Gilgai scandium project in 2012.
Pursell proposed delaying discussions until the in-fill drilling program and pilot plant program were complete.
After the pilot plant program was completed in January 2015, in a telephone conversation in February we requested a sample of JRV’s scandium oxide product to advance our off-take discussions with an end-user.
Pursell refused.
In June 2015, Pursell approached SDI with an unsolicited offer to place 5 m JRV shares at 10 cents; the placement would include a seat on the Board of JRV.

With the share price trading at 4.9 cents and the 30-day moving average being 5.1 cents, not to mention placements being done at the time at a discount to the moving average not a 100% premium to it, we offered to buy 10 m shares at 5 cents, which would provide Pursell with the $500,00 he sought without disadvantaging SDI in the process.
Pursell refused.
So we knew a rights issue was in the offing—just as we knew it would be poorly received because JRV shareholders were exhausted and bitter.
We established a small position in JRV and took up our full allotment of the rights issue.
When the rights issue only placed 8.8 m shares at 5 cents of the 32 m shares it sought, in October 2015 SDI applied to purchase 18 m shares from the Shortfall Offer.
This would not have constituted a controlling interest in JRV on a fully diluted basis.
Pursell refused our transfer of $900,000.
First he raised non-existent FIRB concerns; then non-existent ACCC concerns; then he claimed one of his directors was in Kakadu and the Board could not act until he returned.
Then in November 2015, after stalling SDI for more than a month, Pursell placed 11.1 m unrestricted shares with Explaurum Ltd, 1 m with an undisclosed recipient, and 2 m shares with Platypus Resources for a number of tenements it made little sense to buy.
If the purpose of the rights issue were in effect to raise funds to sustain operations, why would the Board of JRV turn down $900,000 in cash and instead spend $600,000 in shares for tenements it clearly could not afford to develop?
In February 2016, SDI made a final, higher bid for the Flemington Scandium Project, offering a larger capital sum and net smelter royalty.
Pursell refused.
These are the offers Pursell and the Board of JRV have spurned as having no “technical or commercial merit” —on JRV shareholders’ behalf, of course.
Pursell misrepresentation #2:
“On the off chance that we had misread the situation, SDI was invited to place its proposals before a neutral and competent person selected by Jervois for evaluation. This proposal was ignored - that told us all we needed to know. The proposals lacked substance and our judgement, on behalf of shareholders, was confirmed.”
Truth of the situation:
Duncan Pursell and JRV did not suggest a 3^rd party adjudicator weigh the validity of SDI funding claims.
The idea was proposed by an intermediary after the AGM in November 2015.
In early December 2015, the intermediary proposed JRV and SDI jointly appoint a 3^rd party adjudicator acceptable to both parties to confirm the validity of SDI’s off-take and funding claims.
SDI immediately agreed.
In February 2015, after more than two months of stalling, these were the conditions JRV unilaterally dictated in an email to the intermediary (emphasis added):
“We are, however, willing to consider an arrangement on the following terms, which you may choose to pass on to Mr Karn:

1. The terms of reference for the Expert will be drawn by the company’s lawyers.
2. The Expert will be a prominent Australian lawyer (a member of AMPLA), chosen by Jervois, with expertise in contracts for the supply of minerals in Australia.
3. The Expert will, of course, be innocent of any conflict of interest with regard to either party or any major shareholder.
4. The Expert will report to Jervois.
5. Mr Karn will pay to the Expert’s trust account before the investigation commences, the agreed amount of the Experts Fee (inclusive of GST).
6. If Jervois, as a consequence of the findings of the Expert, decides (in Jervois’ absolute unfettered discretion) to entertain a proposal put forward by Mr Karn, which results in a binding agreement between Jervois and a purchaser of Scandium product, Jervois will reimburse to Mr Karn the Expert’s fee.
7. The process will be confidential unless both parties agree to the contrary.”

The time-stamped email is available on request.
The board of SDI as well as the intermediary, who was nominated by JRV, found the conditions so unworkable we decided that a response was not warranted.
In February 2016 we made our final offer to buy the Flemington Scandium Project.
Pursell refused.

Look at those conditions again:
JRV chooses the 3rd party adjudicator, but SDI pays for his services.
JRV is privy to the report, but SDI is not.
Then, if-maybe-perhaps, should SDI claims prove to be true, and it leads to a binding off-take agreement, JRV will reimburse SDI for the expert's fee.
What a deal.
We suspect Pursell knew no one would agree to such terms and was using the entire exercise to delay our progress in garnering support to oust the Board of JRV.
Duncan Pursell’s entire defense against working with SDI to fund development of JRV’s flagship scandium project rests on his assertions that my company's claims of potential off-take and development round funding are untrue.
If we were to demonstrate our claims are in fact true, he would be exposed as something of a fraud—or at least as not acting in his shareholders’ best interests.
Rather than defending ourselves against the baseless accusations of an 84-year old, we have decided to simply keep highlighting his …achievements during his 28-year tenure at the helm of JRV—all of which speak for themselves.
JRV’s market capitalization and share price performance speaks for itself.
The endless dilution Pursell has subjected JRV shareholders to speaks for itself.
That more than 8 out of every 10 of JRV’s 5000 shareholders have lost the vast majority of their investment in JRV and are now being removed from the share registry and forced to take a tax loss sale speaks for itself.
That JRV could operate a gold mine at a loss every year during a period that saw the price of gold run from roughly $350/oz to $1250/oz speaks for itself.
That JRV chose not to grant China Railways Resource Company an extension to complete their due diligence on a proposed joint venture worth hundreds of millions of dollars speaks for itself.
In fact, JRV’s complete lack of board-level independent oversight speaks for itself.
Thank you again for bringing Pursell’s letter to my attention.

We appreciate your support.
If you would care to do so, you have my permission to share this email with any other JRV shareholders you know.
Kind regards,

Richard Karn
Managing Director
Scandium Developments International Pty Ltd
+61 403 782 883 // [email protected]