Augen Capital Corp.
TSX VENTURE : AUG

Augen Capital Corp.

November 29, 2010 13:54 ET

Augen Capital Reports 2010 Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 29, 2010) - Augen Capital Corp. ("Augen" or "the Company") (TSX VENTURE:AUG) today announced its unaudited interim consolidated financial results for the third quarter ended September 30, 2010.

In the quarter ended September 30, 2010, the Company reported net income of $214,640 compared to a net loss of $778,668 in same quarter of 2009. In 2010, the Company reported an unrealized gain on investments held-for-trading of $1,040,652 compared to an unrealized gain of $666,661 in 2009. Net income in 2010 was decreased by an income tax provision of $3,262 compared to a decrease in the net loss by an income tax recovery of $197,404 in the same quarter of 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. While the market has improved markedly since the lows of early 2009, the current uncertainty is likely to have an impact on the Company's investment portfolio as a result of increased volatility.

The Managed Products ("MP") consulting asset base declined by 55% year-over-year at September 30, 2010, 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. Augen has not offered or consulted on any new flow-through limited partnerships since mid-2008. Further, 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.

Consolidated expenses increased by $316,961 in the third quarter of 2010 compared to the third quarter of 2009. Year-over-year, the Company reduced certain components of its general and administrative expenses by $23,743. The reduction in these expenses was fully offset by an increase in corporate development and professional fees of $340,196 which specifically related to costs incurred in connection with the Company's contested annual and special meeting of shareholders and costs incurred for the Company's dissident shareholder action in connection with the annual and special meeting of shareholders of an investee Company in the MB portfolio.

Consolidated Statements of Operations and Comprehensive Earnings
    Merchant Banking     Managed Products     Total  
For the three months ended September 30,   2010     2009     2010     2009     2010     2009  
    $     $     $     $     $     $  
Income (loss)   (11,658 )   (173,727 )   4,087     29,831     (7,571 )   (143,896 )
Expenses   780,533     325,424     30,210     168,358     810,743     493,782  
Earnings (loss) before undernoted items   (792,191 )   (499,151 )   (26,123 )   (138,527 )   (818,314 )   (637,678 )
Share of (earnings) loss and capital transactions and impairment loss from equity-accounted investment   -     999,907     -     -     -     999,907  
Unrealized (gain) loss on investments held-for-trading   (1,040,652 )   (666,661 )   -     -     (1,040,652 )   (666,661 )
Amortization   3,992     2,574     444     2,574     4,436     5,148  
Earnings (loss) before income taxes   244,469     (834,971 )   (26,567 )   (141,101 )   217,902     (976,072 )
Income taxes                                    
  Current                           8,778     (7,714 )
  Future                           (5,516 )   (189,690 )
                            3,262     (197,404 )
Net earnings (loss) and comprehensive earnings (loss)                           214,640     (778,668 )

For the nine month period ended September 30, 2010, the Company reported a net loss of $422,316 compared to a net loss of $1,380,084 for three quarters of 2009. In 2010, the Company reported an unrealized gain on investments held-for-trading of $1,590,542 compared to an unrealized gain of $1,082,006 in 2009. The net loss in 2010 was increased by an income tax provision of $21,376 compared to a decrease in net loss by an income tax recovery of $487,512 for the same three quarters of 2009.

Consolidated Statements of Operations and Comprehensive Earnings
    Merchant Banking     Managed Products     Total  
For the nine months ended September 30,   2010     2009     2010     2009     2010     2009  
    $     $     $     $     $     $  
Income (loss)   120,912     (137,336 )   12,244     98,167     133,156     (39,169 )
Expenses   1,828,376     1,109,115     90,794     523,519     1,919,170     1,632,634  
Earnings (loss) before undernoted items   (1,707,464 )   (1,246,451 )   (78,550 )   (425,352 )   (1,786,014 )   (1,671,803 )
Share of (earnings) loss and capital transactions and impairment loss from equity-accounted investment   192,160     1,223,394     -     -     192,160     1,223,394  
Unrealized (gain) loss on investments held-for-trading   (1,590,542 )   (1,082,006 )   -     -     (1,590,542 )   (1,082,006 )
Non-recurring charges   -     19,480     -     19,479     -     38,959  
Amortization   11,977     7,723     1,331     7,723     13,308     15,446  
Earnings (loss) before income taxes   (321,059 )   (1,415,042 )   (79,881 )   (452,554 )   (400,940 )   (1,867,596 )
Income taxes                                    
  Current                           15,885     (15,341 )
  Future                           5,491     (472,171 )
                            21,376     (487,512 )
Net earnings (loss) and comprehensive earnings (loss)                           (422,316 )   (1,380,084 )

Merchant Banking Portfolio

The Company's investment portfolio had a fair value of $2,868,614 as at September 30, 2010, having increased by $1,707,568 year-over-year, a 147% 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 seven consecutive quarters, and has reported a net realized loss on the sale of investments held for trading for the first time in three quarters, resulting from the disposition of underperforming investments. A net realized loss of $73,750 was reported year-to-date for 2010.

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 in exchange for the other parties' agreement to release each other from their respective obligations under the Management Agreement and the Master Agreement.

The final management fee instalment for the month of October 2010 of $95,960 was paid by the Company to OreReserve subsequent to the end of the period and prior to the new settlement agreement.

The full interim unaudited consolidated financial statements for the three and nine months ended September 30, 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 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