Augen Capital Corp.
TSX VENTURE : AUG

Augen Capital Corp.

June 29, 2011 19:20 ET

Augen Capital Reports 2011 First Quarter Results

TORONTO, ONTARIO--(Marketwire - June 29, 2011) - Augen Capital Corp. ("Augen" or the "Company") (TSX VENTURE:AUG) today announced its interim unaudited consolidated financial results for the first quarter ended March 31, 2011.

The Company reported a net loss of $2,372,234 ($0.04 loss per share) for the quarter ended March 31, 2011 compared to a net loss of $649,638 ($0.02 loss per share) for the same period in 2010. In 2011, the Company reported an unrealized loss on fair value through profit and loss ("FVTPL") investments of $2,051,964 compared to an unrealized gain of $4,633 during the same quarter of 2010. The Company reported income of $5,167 in 2011 compared to reporting $70,412 of income during the first quarter of 2010.

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 declined to $NIL at December 31, 2010, and as such, 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 $319,504 in 2011 compared to $517,750 in 2010. The decrease of $198,246 is primarily due to: Management fee expense was $NIL in 2011 compared to $287,880 in 2010. Effective October 31, 2010, the Company terminated the Management Agreement with OreReserve, the Company's former Manager, and as such, no longer incurs management fee expense. Further, corporate development expense was $5,248 in 2011 compared to $52,262 in 2010 and professional fees were $38,067 in 2011 compared to $59,748 in 2010. The decrease in these expenses was partially offset by the following increase in expenses: wages and benefits expense was $78,860 in 2011 compared to $4,118 in 2010; share-based compensation was $68,558 in 2011 compared to $16,020 in 2010, due to the Company granting 1,050,000 stock options, of which, 900,000 immediately vested in 2011 compared to stock options being outstanding in 2010 which vested over 3 years; general and administrative expenses were $117,176 in 2011 compared to $96,761 in 2010; and sales and marketing expense was $11,595 in 2011 compared to $961 in 2010. The increase in certain expenses in 2011 was primarily due to the Company incurring these expenses directly, as opposed to being incurred by the former Manager through the Management Agreement in 2010.

Consolidated Statements of Operations and Comprehensive Earnings (loss)
Merchant Banking Managed Products Total
For the three months ended March 31, 2011 2010 2011 2010 2011 2010
$ $ $ $ $ $
Income (loss) 4,982 66,941 185 3,471 5,167 70,412
Expenses 312,648 487,360 6,856 30,390 319,504 517,750
Earnings (loss) before undernoted items (307,666 ) (420,419 ) (6,671 ) (26,919 ) (314,337 ) (447,338 )
Share of (earnings) loss and capital transactions from equity-accounted investment - 192,160 - - - 192,160
Unrealized (gain) loss on FVTPL investments 2,051,964 (4,633 ) - - 2,051,964 (4,633 )
Amortization 5,183 3,992 576 444 5,759 4,436
Earnings (loss) before income taxes (2,364,813 ) (611,938 ) (7,247 ) (27,363 ) (2,372,060 ) (639,301 )
Income taxes
Current 174 (328 )
Deferred - 10,665
174 10,337
Net earnings (loss) and comprehensive earnings (loss) (2,372,234 ) (649,638 )
Earnings (loss) per share
Basic and diluted (0.04 ) (0.02 )
Weighted average shares outstanding 62,074,012 36,615,614

Merchant Banking Portfolio

The Company's investment portfolio had a fair value of $4,377,367 as at March 31, 2011, having decreased by $1,624,776 since December 31, 2010, a 27% decrease. The net decline in fair value of the investments held at December 31, 2010 was partially offset by the acquisition of certain other investments during the quarter. The Company reported an unrealized loss on FVTPL investments of $2,051,964 during the quarter.

The Company's most significant investment, which represented 75% of the MB portfolio as at March 31, 2011, declined in fair value by $1,958,232, or 37%, since December 31, 2010, which had a significant negative impact on the earnings of the Company.

Change in Financial Reporting Standards

The first quarter of 2011 marks the first period after the Company's changeover to International Financial Reporting Standards ("IFRS"). Details on the changeover are contained in the Company's notes to the interim unaudited consolidated financial statements and the Management's Discussion and Analysis for the period ended March 31, 2011.

The full interim unaudited consolidated financial statements for the quarter ended March 31, 2011 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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