Augen Capital Corp.
TSX VENTURE : AUG

Augen Capital Corp.

April 30, 2010 20:49 ET

Augen Capital Reports 2009 Results

TORONTO, ONTARIO--(Marketwire - April 30, 2010) - Augen Capital Corp. ("Augen" or "the Company") (TSX VENTURE:AUG) today announced its audited consolidated financial results for the year ended December 31, 2009.

The Company reported a loss of $2,584,563 for the year ended December 31, 2009 compared to a loss of $3,512,350 for the 2008 year. The Company generates income primarily through the activities of its Merchant Banking (MB) segment, the strength of which is closely related to global market conditions and the general economic environment. The recent global economic and capital market challenges of 2008 and early 2009 have had a significant impact on the Company's ability to generate income, demonstrated by the reduction of $1,581,187 in income generated for 2009.

Management believes the current general market conditions have improved and expects the recent trend of improvement in the Company's MB investment portfolio to continue in 2010. The MB investment portfolio has recovered by 149% since its low at the end of 2008, which has contributed to the reduction of $2,169,366 in net loss before income taxes. The value of the MB portfolio remains off by approximately 37% from the levels prior to the recent global economic downturn which started on or around Q2 2008, and is the result of fluctuations in fair value of the portfolio and transactional activity.

The Managed Products (MP) consulting asset base declined by 36% year-over-year at December 31, 2009, which is primarily the result of fluctuations in fair value of the MP consulting asset base and the redemption of assets from the RS Fund, now the Exemplar Portfolios Ltd. Further, Augen has not offered or consulted on any new flow-through limited partnerships since mid-2008.

Consolidated expenses decreased by $563,383 in 2009. A key factor which contributed to the reduction in consolidated expenses was that the Company was able to cap certain operational expenses pursuant to the Management Agreement entered into with OreReserve Asset Management Inc. ("OreReserve"). The reduction in consolidated expenses was offset by the Company's share of loss and capital transactions from its equity-accounted investment in Augen Gold Corp. (TSX VENTURE:GLD) along with a permanent impairment in the carrying value of the investment, which combined totaled $1,245,190.

Consolidated Statements of Operations and Comprehensive Earnings
  Merchant Banking   Managed Products   Total      
For the years ended December 31, 2009   2008   2009   2008   2009   2008  
  $   $   $   $   $   $  
Income (loss) (164,012 ) 610,629   118,307   924,853   (45,705 ) 1,535,482  
Expenses 1,418,189   1,430,260   764,932   1,316,244   2,183,121   2,746,504  
Earnings (loss) before undernoted items (1,582,201 ) (819,631 ) (646,625 ) (391,391 ) (2,228,826 ) (1,211,022 )
Share of (earnings) loss and capital transactions, and impairment loss from equity-accounted investment 1,245,190   (464,970 ) -   -   1,245,190   (464,970 )
Unrealized (gain) loss on investments held for trading (1,393,492 ) 3,246,331   -   -   (1,393,492 ) 3,246,331  
Non-recurring charges 19,480   257,438   19,479   257,438   38,959   514,876  
Adjustment to fair value of liabilities -   (220,380 ) -   -   -   (220,380 )
Amortization 10,297   11,283   10,298   11,282   20,595   22,565  
Earnings (loss) before income taxes (1,463,676 ) (3,649,333 ) (676,402 ) (660,111 ) (2,140,078 ) (4,309,444 )
Income taxes                        
  Current                 (26,444 ) (378,730 )
  Future                 470,929   (418,364 )
                  444,485   (797,094 )
Net earnings (loss) and comprehensive earnings (loss)               (2,584,563 ) (3,512,350 )

For the three month period ended December 31, 2009, Augen's net loss was $1,204,479 compared to $554,983 in the same period in 2008. The Company generated $339,211 less income in the fourth quarter of 2009 compared to the fourth quarter of 2008 for similar reasons as described above. Consolidated expenses declined by $188,888 in 2009, primarily as a result of the Management Agreement between the Company and OreReserve, as discussed above. The Company reported an unrealized gain in the MB investment portfolio of $311,486 in 2009 compared to an unrealized loss of $725,293 in 2008, which reflects the recent trend of recovery in the MB investment portfolio. The Company recorded a non-cash change in the valuation allowance for future income taxes of $911,389 in 2009, which had a significant negative impact on the 2009 results.

Consolidated Statements of Operations and Comprehensive Earnings
  Merchant Banking   Managed Products   Total      
For the three months ended December 31, 2009   2008   2009   2008   2009   2008  
  $   $   $   $   $   $  
Income (loss) (26,676 ) 43,668   20,140   289,007   (6,536 ) 332,675  
Expenses 309,074   385,037   241,413   354,338   550,487   739,375  
Earnings (loss) before undernoted items (335,750 ) (341,369 ) (221,273 ) (65,331 ) (557,023 ) (406,700 )
Share of (earnings) loss and capital transactions from equity-accounted investment 21,796   (471,644 ) -   -   21,796   (471,644 )
Unrealized (gain) loss on investments held for trading (311,486 ) 725,293   -   -   (311,486 ) 725,293  
Amortization 2,574   2,440   2,575   2,439   5,149   4,879  
Earnings (loss) before income taxes (48,634 ) (597,458 ) (223,848 ) (67,770 ) (272,482 ) (665,228 )
Income taxes                        
  Current                 (11,103 ) (55,745 )
  Future                 943,100   (54,500 )
                  931,997   (110,245 )
Net earnings (loss) and comprehensive earnings (loss)                 (1,204,479 ) (554,983 )

Merchant Banking Portfolio

The Company's investment portfolio had a fair value of $1,601,793 as at December 31, 2009, having increased by $959,648 since December 31, 2008, a 149% increase. As a result of the increase in value of the MB portfolio and transactional activity during the year, the Company reported a net realized and unrealized gain of $1,393,492 for the year ended December 31, 2009, compared to a net realized and unrealized loss of $3,246,331 during the same period in 2008.

Investment in Augen Gold Corp. ("AGC")

Non-revolving secured loan facility

In November 2009, the Company announced that it agreed to provide a non-revolving secured loan facility to a maximum of $1,100,000 to AGC at an interest rate of 12% per annum. AGC drew $269,432 under this facility and that amount remains outstanding and is due and payable by November 24, 2010. Under the terms of the facility, as long as any amount remains outstanding, AGC is required to repay the outstanding principal and interest in an amount of up to one-half of funds that AGC raises from any source.

Impairment loss

The carrying amount of the Company's equity-accounted investment in AGC has decreased since December 31, 2008 by $123,339 of which an increase of $1,121,851 represents the shares-for-debt conversion of an amount due from AGC which is discussed below, partially offset by $279,186 which represents the Company's proportionate share of AGC's loss and capital transactions for the year and further offset by $966,004 which represents a loss in the carrying value of the investment. At September 30, 2009, the Company assessed the carrying value of its investment in AGC and determined that a decline in the carrying value which was other than temporary had occurred and as such, the impairment loss of $966,004 was recorded. As at April 29, 2010, based on the closing price per share, the market value of the Company's investment in AGC was $2,303,802.

Shares-for-debt transaction

At a special meeting of the shareholders of AGC held on March 13, 2009, AGC shareholders approved a shares-for-debt transaction for the conversion of debt owed by AGC to Augen Capital Corp., into common shares. On April 7, 2009, AGC issued 7,479,010 common shares to settle $1,121,851 of debt. Augen Capital Corp. now owns 11,519,010 shares of AGC or approximately 23.1% of the currently issued and outstanding common shares of AGC.

The full audited consolidated financial statements for the year ended December 31, 2009 are available at www.augencc.com or at www.sedar.com.

About Augen Capital

Augen Capital Corp. ("Augen") (TSX VENTURE:AUG) is a Toronto-based public merchant bank specializing in the financing of and investment in emerging resource companies. Augen manages a merchant banking hard dollar portfolio of emerging resource stocks.

For more information on Augen Capital, visit our website at www.augencc.com

The Company's public documents may be accessed at www.sedar.com

This news release contains forward-looking statements. These statements are based on certain factors and assumptions as set forth in this news release including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to results of exploration, project development, reclamation and capital costs of the companies in the merchant banking portfolios ("investee companies"), and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for the minerals the investee companies expect to produce; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company and investee companies. Additional risks and uncertainties can be found in our Management's Discussion and Analysis and in filings with the Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this news release and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Shares outstanding: 36,615,615

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Augen Capital Corp.
    Peter F. Chodos
    Interim President and Chief Executive Officer
    416-479-3301 or Toll-free: 888-442-8436
    investorrelations@augencc.com