Concerned Shareholders of Augyva Mining Resources Inc.

August 26, 2011 11:56 ET

Augyva CEO and Board Supporters Resist Groundswell of Shareholder Democracy and Remain Unresponsive to Shareholder Concerns

Not Heeding Shareholder Calls for Change

TORONTO, ONTARIO--(Marketwire - Aug. 26, 2011) - RCM Partners Inc. ("RCM"), on behalf of funds and entities that it advises (the "Concerned Shareholder") that are shareholders of Augyva Mining Resources Inc. ("Augyva" or the "Company"), strongly condemns the latest press release issued on August 25, 2011 by Augyva President and CEO Georges-Yvan Gagnon, and supporters René Dufour, Louis-Philippe Mendes, and Robert Tremblay ("Management").

"We believe that Mr. Gagnon and his supporters on the board are simply reacting to the overwhelming support received for the Concerned Shareholder's proposal for change. We are grateful that so many shareholders have joined us in sending a clear and unqualified message to Management", said Kuldeep Billan, Principal of RCM. "The latest Management press release served only to underscore Management's disregard for shareholders, and their indifference towards shareholders throughout this proxy contest only confirms our belief that they are unfit to lead Augyva."

A Board in Question

Management lead by Mr. Gagnon claims to be acting with the approval of the Board of Directors, when in fact the composition of the board itself remains in question. As acknowledged by Management, the attempt by Mr. Gagnon and his supporters to obtain an injunction and declare void a meeting of the board of directors of Augyva was rejected by a Superior Court Justice on August 18, 2011. The Concerned Shareholder believes this is yet another indication of Management's detachment from what it believes are corporate issues affecting all shareholders.

An Attempt to Retain Power

Mr. Gagnon and his supporters on the board have a pattern of taking lightly the will of shareholders. After 25 years of little to no progress, and on the eve of the proxy deadline, Management is faced with the judgement of the true owners of Augyva – the shareholders. In their latest press release, Management announced two last-minute and weak attempts to give the appearance of good stewardship. The announcement of the retention of a financial advisor and the search for an investor relations firm following years of failure to engage with shareholders are both transparent attempts by Management to curry favour with shareholders frustrated by the status quo. Shareholders deserve better.

False Allegations

In its latest press release, Management alleges that representatives of the Concerned Shareholder plan to sell the Company's Duncan Lake assets to Century Iron Ore Corporation ("Century"). Neither the Concerned Shareholder nor its representatives have represented that a sale of Duncan Lake is the preferred option for the Company. In fact, the Concerned Shareholder makes very clear that a properly constituted board of independent and experienced individuals should complete a strategic review of the Company's options vis-à-vis its Duncan Lake interest and then act in the best interests of ALL shareholders. An independent and experienced board will also ensure that proper financial and ethical controls are instituted for the protection of shareholder value.

It is telling that Mr. Gagnon and his Board supporters level vague criticisms toward the Concerned Shareholder by questioning the methods of proxy solicitation used by the Concerned Shareholder. The proxy solicitations conducted by the Concerned Shareholder during this proxy contest is a completely justified exercise of shareholder democracy and gives voice to serious concerns held by the Concerned Shareholder – concerns that Management would prefer to remain unspoken.

Poor Record of Value Creation and Inability to Develop Assets

Over the past five years, the Company's share price has lost approximately 48% of its value and this has been further exacerbated by the significant increase in the number of shares outstanding, which has grown by approximately 200% over the same period. The Concerned Shareholder believes that, under the stewardship of Mr. Gagnon, the Company has repeatedly failed to demonstrate an ability to engage in a focused development of its assets and has made relatively little progress on developing any of its assets over the past 25 years. By criticising board chairman Mr. Sandy Chim in its latest press release, Management is simply attempting to deflect attention away from these fundamental factors that have lead to Augyva's underperformance.

Questionable Capital Allocation and Strategy

Management and the current Board appears to have disregarded sound principles of capital allocation and corporate strategy. The Company's attempted acquisition of Niocan Inc. ("Niocan"), in addition to a subsequent financing offer, appears to demonstrate a disregard for shareholder dilution, a questionable understanding of corporate finance and capital markets, and a lack of a coherent strategy to maximize value for all shareholders. Management's stated objective in its press release ignores two fundamental facts: (1) Niocan is controlled by a 40% shareholder with no apparent intention of monetizing; and (2) achieving a minority equity position does nothing to expand the Company's asset base given the minimal prospects for control of Great Whale, one of Niocan's assets, again owing to the presence of a large shareholder who has already rebuffed the Company's advances; rather the Concerned Shareholder believes the attempted acquisition and subsequent financing offer were misallocations of the Company's resources which would have more value if deployed in the Duncan Lake Iron Ore project.

Poor Disclosure and Failures of Corporate Governance

The Concerned Shareholder believes that the current Board has engaged in poor disclosure practices, to the detriment of all shareholders. For instance, although it is a material agreement to the Company, there has been no disclosure of the Joint Operating Agreement governing the operation of the Duncan Lake Iron Ore Project and the joint venture between Augyva and Century as at the time of issuance of this press release, contrary to statements made in the press release of Management yesterday.

Additionally, the Concerned Shareholder is alarmed by the fact that the Company has had, since February 2007, a total of 10 different directors. The Concerned Shareholder director nominees were carefully chosen based on depth of relevant industry experience, key skill sets, independence and a view toward a stable board of directors. The Concerned Shareholder believes that its proposed board will be able to add value for the benefit of all shareholders.

Management's Refusal to Engage with its Shareholders

In the view of the Concerned Shareholder, the greatest insult to shareholders by Management was and is its refusal to engage in a constructive dialogue about the strategy and direction of the Company. The Concerned Shareholder and its representatives have attempted, on numerous occasions, to engage directly with Management in order to come to a constructive solution for the benefit of all shareholders. It was only after careful consideration of the enormous risks in permitting the status quo to continue unchallenged that the Concerned Shareholder decided to take its case directly to fellow Augyva shareholders – and we are grateful for the immense support received.

The Concerned Shareholder believes that shareholders deserve better – and are confident that board cohesion and independence, as well as a coherent, well-considered strategic plan, can serve to maximize the value of Augyva for the benefit of all shareholders.

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