Augen Capital Corp.
TSX VENTURE : AUG

Augen Capital Corp.

April 28, 2011 16:18 ET

Augen Capital Reports 2010 Results

TORONTO, ONTARIO--(Marketwire - April 28, 2011) -Augen Capital Corp. ("Augen" or the "Company") (TSX VENTURE:AUG) today announced its audited consolidated financial results for the year ended December 31, 2010.

The Company reported net earnings of $989,052 ($0.03 earnings per share) for the year ended December 31, 2010 compared to a net loss of $2,584,563 ($0.07 loss per share) for the 2009 year. In 2010, the Company reported an unrealized gain on investments held-for-trading of $4,787,881 compared to an unrealized gain of $1,393,492 in 2009. The Company reported income of $517,611 in 2010 compared to reporting a loss of $45,705 in 2009.

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. Management believes the current market conditions have become more difficult, especially for junior exploration companies, and has therefore refocused on companies with near term production and cash flow. While the market has improved markedly since the lows of early 2009, the current uncertainty is likely to have a continued impact on the Company's investment portfolio as a result of increased volatility.

The Managed Products ("MP") consulting asset base has declined to $NIL at December 31, 2010. As described below and in the Company's November 15, 2010 press release, due to the termination of certain agreements, Augen will no longer earn consulting fees on the historic MP consulting assets. Augen has not offered or consulted on any new flow-through limited partnerships since mid-2008.

Consolidated expenses were $3,308,631 in 2010 compared to $2,183,121 in 2009. The increase of $1,125,510 is due to: an increase of $575,222 in the management fee expense, due to the termination fee paid to OreReserve, the Company's former manager upon the termination of the Management Agreement; an increase of $279,500 in general and administrative expenses, due primarily to the Company's contested annual and special meeting of shareholders in 2010 and the termination of the Management Agreement with OreReserve in 2010; an increase of $208,086 in stock-based compensation, due to the Company granting 3,400,000 stock options which immediately vested in 2010 compared to having stock options outstanding in 2009 which vested over 3 years; and an increase of $71,890 in corporate development expenses, due primarily to the Company's dissident shareholder action in connection with the annual and special meeting of Augen Gold Corp., an investee company in the MB portfolio, and due to other MB initiatives.

Consolidated Statements of Operations and Comprehensive Earnings (loss)

Merchant BankingManaged ProductsTotal
For the years ended December 31,201020092010200920102009
$$$$$$
Income (loss)504,678(164,012)12,933118,307517,611(45,705)
Expenses3,128,9921,418,189179,639764,9323,308,6312,183,121
Earnings (loss) before undernoted items(2,624,314)(1,582,201)(166,706)(646,625)(2,791,020)(2,228,826)
Share of (earnings) loss and capital transactions and impairment loss from equity-accounted investment192,1601,245,190--192,1601,245,190
Unrealized (gain) loss on investments held-for-trading(4,787,881)(1,393,492)--(4,787,881)(1,393,492)
Non-recurring charges-19,480-19,479-38,959
Write-down of mineral properties and deferred exploration costs751,160---751,160-
Amortization16,35710,2971,81810,29818,17520,595
Earnings (loss) before income taxes1,203,890(1,463,676)(168,524)(676,402)1,035,366(2,140,078)
Income taxes
Current40,823(26,444)
Future5,491470,929
46,314444,485
Net earnings (loss) and comprehensive earnings (loss)989,052(2,584,563)
Earnings (loss) per share
Basic and diluted0.03(0.07)
Weighted average shares outstanding36,659,02336,615,614

For the three month period ended December 31, 2010, the Company reported net earnings of $1,411,368 compared to a net loss of $1,204,479 for same period in 2009. In 2010, the Company reported an unrealized gain on investments held-for-trading of $3,197,339 compared to an unrealized gain of $311,486 in 2009. The net loss in 2010 was increased by an income tax provision of $24,938 compared to an increase in net loss by an income tax provision of $931,997 for the period in 2009.

For the three months and the year ended December 31, 2010, net earnings were reduced by the write-down of mineral properties and deferred exploration costs of $751,160, compared to no write-downs in 2009.

Consolidated Statements of Operations and Comprehensive Earnings (loss)

Merchant BankingManaged ProductsTotal
For the three months ended December 31,201020092010200920102009
$$$$$$
Income (loss)383,766(26,676)68920,140384,455(6,536)
Expenses1,300,616309,07488,845241,4131,389,461550,487
Earnings (loss) before undernoted items(916,850)(335,750)(88,156)(221,273)(1,005,006)(557,023)
Share of (earnings) loss and capital transactions and impairment loss from equity-accounted investment-21,796---21,796
Unrealized (gain) loss on investments held-for-trading(3,197,339)(311,486)--(3,197,339)(311,486)
Write-down of mineral properties and deferred exploration costs751,160---751,160-
Amortization4,3802,5744872,5754,8675,149
Earnings (loss) before income taxes1,524,949(48,634)(88,643)(223,848)1,436,306(272,482)
Income taxes
Current24,938(11,103)
Future-943,100
24,938931,997
Net earnings (loss) and comprehensive earnings (loss)1,411,368(1,204,479)
Earnings (loss) per share
Basic and diluted0.04(0.03)
Weighted average shares outstanding36,787,83436,615,614

Merchant Banking Portfolio

The Company's investment portfolio had a fair value of $6,002,143 as at December 31, 2010, having increased by $4,400,350 year-over-year, a 275% increase. As a result of the increase in value of the MB portfolio and transactional activity, the Company reported an unrealized gain on investments held for trading for eight consecutive quarters, and has reported a net realized gain on the sale of investments held-for-trading of $306,590 for the year.

Management Agreement with OreReserve Asset Management Inc.

On November 15, 2010, the Company announced that it had reached an agreement with Integrated Asset Management Corp. ("IAM") and its subsidiary, OreReserve Asset Management Inc. ("OreReserve"), to treat their respective rights and obligations under the Management Agreement (the "Management Agreement") as being fully discharged and at an end. The Company has also reached agreement with IAM's subsidiary, BluMont Capital Corporation ("BluMont Capital"), to treat their respective rights and obligations under the Master Agreement dated August 24, 2007 (the "Master Agreement") and various related agreements referred to therein, as being fully discharged and at an end.

Pursuant to the terms of the Management Agreement, the Company was responsible for paying an annual management fee of at least $1,115,520 to OreReserve in exchange for OreReserve providing management services to the Company. Under the new agreement with IAM, OreReserve and BluMont Capital, Augen has made a single, one-time, total payment of $650,000, inclusive of tax, in exchange for the other parties' agreement to release each other from their respective obligations under the Management Agreement and the Master Agreement.

The full audited consolidated financial statements for the year ended December 31, 2010 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 provision of management, consulting and due diligence services to listed issuers in the mineral exploration, development and extraction sectors. Augen also assists in the financing of and investment in resource companies or projects. In addition, Augen acts as a consultant to issuers of mineral resource tax-advantaged flow-through shares in Canada.

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: 77,837,039

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.

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