Augyva Mining Resources Inc.

Augyva Mining Resources Inc.

August 25, 2011 15:18 ET

Augyva Takes Initiatives to Maximize the Value of the Company

Four directors respond to the composition of the board of directors and the recent proxy solicitation from RCM Partners Inc.

LA MACAZA, QUEBEC--(Marketwire - Aug. 25, 2011) - Georges-Yvan Gagnon, founder, president–CEO, and director of Augyva Mining Resources Inc. (TSX VENTURE:AUV) ("Augyva"), and three independent directors, René Dufour, Louis-Philippe Mendes, and Robert Tremblay, wish to

  1. advise shareholders of three recent initiatives undertaken by Augyva to maximize company value

  2. clarify the current makeup of the Augyva board of directors (the "BOD") and recent proceedings initiated with the Quebec Superior Court, and

  3. respond to the August 16, 2011 proxy solicitation issued by RCM Partners Inc. ("RCM Partners"), a fund manager, for use at the shareholder meeting scheduled for August 29, 2011

Overview of the facts regarding the transfer of the Duncan Lake joint venture

On December 6, 2010, Augyva announced that a joint venture with Canadian Century Iron Ore Corporation ("Century") had been formed for the Duncan Lake iron project (the "Project"). Century completed a $6 million round of financing to acquire an undivided 51% interest (Augyva 49%) in the project, in accordance with the option and joint venture agreement signed by the parties in May 2008.

Century is now the operator of the project and holds an option to acquire an additional undivided 14% interest by investing an additional $14 million on exploratory and development efforts between now and May 20, 2016, or by producing a feasibility report for the project.

After a series of transactions, Century is now part of Century Iron Ore Corporation, recently listed on the TSX Venture Exchange (FER). Sandy Chim is the corporation's CEO and Michael Skutezky its corporate secretary. These two individuals have also been members of the Augyva BOD since September 2008. Sandy Chim was also chief executive officer of Augyva until December 6, 2010, at which time he resigned to devote his attention to Century.

Review of potential conflicts of interest

The conflict of interest recently made public within the Augyva BOD stems from the fact that Sandy Chim is both the chair of the Augyva BOD and the president and founder of the Canadian Century Iron Ore Corporation.

Augyva President–CEO and director Georges-Yvan Gagnon and independent directors René Dufour, Louis-Philippe Mendes, and Robert Tremblay believe that Sandy Chim's nonneutral status has effectively engendered fundamental differences of opinion as to the directions Augyva should take. They also believe that Mr. Chim's lack of objectivity and the influence that he exerts in his dual role may

  • Lead to an undervaluation of Augyva shares vis-à-vis Century shares

  • Leave Augyva vulnerable to an eventual undervalued takeover by Century

Augyva President–CEO and director Georges-Yvan Gagnon stated that "the Duncan Lake joint venture agreement (available on the Augyva website) can work only if the venture is made up of two corporate entities managed separately and independently of each other."

Independent Committee for the evaluation of the strategic alternatives associated with the Duncan Lake property

On August 22, 2011, the BOD approved the decision to hire a financial advisor who would act with an independent committee that will make the appropriate analysis and recommendations on the undivided 35% interest that Augyva will hold in the Duncan Lake Iron Ore Project once Century Iron Ore Corp. increases its participation to 65%. The approach includes the evaluation of all strategic alternatives in order to maximize value for shareholders.

Augyva President–CEO and director Georges-Yvan Gagnon stated that "the board's decision to retain the services of a financial advisor shows our determination to maximize value for company shareholders in light of recent comments by two dissenters (Kuldeep Bilan and Michael Ruscetta from hedge fund RCM Partners) who claim to have a superior solution: the sale of Duncan Lake's assets to Century."

Investor Relations

Augyva is also analyzing a service proposal made by a specialized firm to handle investor relations activities.

The proposal, subject to final agreement between the two parties, includes a series of actions aimed at actively informing Augyva shareholders and potential investors about the progress and objectives of the company.

Make-up of the BOD

Augyva President–CEO and director Georges-Yvan Gagnon and independent directors René Dufour, Louis-Philippe Mendes, and Robert Tremblay stated that as of August 1, 2011, the date when the BOD issued its resolution appointing Robert Tremblay to replace Dr. Augustin Chow, who had presented written notice of his resignation from Augyva (available on SEDAR), the Augyva BOD consisted of Sandy Chim, Michael Stutezky, Kerry Smith, Georges-Yvan Gagnon, René Dufour, Louis-Philippe Mendes, and Robert Tremblay.

A request for temporary and permanent interlocutory injunctions and the action to declare void a meeting of the BOD was made on behalf of Augyva on August 17, 2011, in the personal names of Messrs. Gagnon, Dufour, and Mendes, seeking to suspend application of the decisions made August 13, 2011, and announced by Sandy Chim in a press release dated August 15, 2011.

The Superior Court did not grant the request at the temporary stage, but the dispute continues with the goal of obtaining a permanent interlocutory injunction, and the merits of the decisions of August 13, 2011, are not recognized.

In addition, during a directors meeting on August 22, 2011, the August 13, 2011, meeting was considered improperly held and the decisions made during this session, primarily Sandy Chim's attempt to wrest control of the company, are deemed to have never been made.

RCM Proxy Solicitation

As for the subject of the August 16, 2011, proxy solicitation prepared by RCM, president–CEO and director Georges-Yvan Gagnon and independent directors René Dufour, Louis-Philippe Mendes, and Robert Tremblay, state as follows:

  • We ask shareholders to reflect on the motivations of RCM and the means at its disposal (phone solicitation campaigns and sending all shareholders proxies by special delivery)

  • Georges-Yvan Gagnon did not profit personally at the expense of Augyva and its shareholders. The amount charged to Augyva during the last five years, approximately $6,000,000, reflects in part operating expenses incurred on behalf of Augyva; further, all management or consultant fees that were billed are in line with—or less than—industry norms.

  • Any debt for equity settlements in favor of Georges-Yvan Gagnon were made in the best interest of the company's cash flow, in accordance with applicable bylaws and regulatory authority requirements.

  • Changes to the Board of Directors made during recent years were undertaken with shareholders' best interests in mind, solely to ensure that the company benefited from the best possible strategic positioning and increased its visibility within the financial community.

  • The Niocan acquisition attempt and subsequent financing offer were both justified by the synergy that would have resulted from the addition of its Great Whale project, located north of the Duncan deposit.

  • Proposals to modify the timeline for liberating shares held in escrow are completely in keeping with regulations currently in force.

  • The salary paid to Georges-Yvan Gagnon as the company's chief executive office is reasonable.

About Augyva Mining Resources Inc.

Augyva is an exploration and development company holding five (5) properties located in the James Bay and Abitibi regions of the Province of Quebec. Its major project under development is the Duncan Lake iron ore Property located in the western part of the La Grande Greenstone Belt and hosts Algoma type iron deposits in a volcano-sedimentary sequence. The property, directly accessible by road, covers 5,848 hectares. Further to a drilling program of over 10,000 meters, completed in May 2009, a National Instrument 43-101 compliant technical report on the mineral resource estimate (the "Technical Report"), prepared by Met-Chem Canada Inc. ("Met-Chem"), was released in March 2010. Met-Chem has completed in December 2010 an internal opportunity study of the property. Augyva also awarded Roche Ltd. the mandate to carry out an environmental scoping study (ESS) for the project. Augyva has also completed the first 8,000 meters of its Phase II drilling program which began in January 2011 and a total of 24 holes have been drilled. Assay results will be released shortly. Other iron and related opportunities continue to be evaluated on an ongoing basis.

In addition to advancing the Duncan Lake iron ore project, Augyva holds an 100% interest in four (4) other gold and base metal properties: Yasinski (gold, platinum, chromite and other base metals) and Kali (gold, copper and other base metals) in the James Bay region; and Senneville (gold) and Malartic (gold) in the Abitibi region.

This news release may contain certain forward-looking information. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in Augyva's disclosure documents on the SEDAR website at Augyva does not undertake to update any forward looking information except in accordance with applicable securities laws.

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

  • Frederic Berard, Attorney
    Special Advisor
    HKDP Communications and Public Affairs
    514-395-0375, ext. 259

    Augyva Mining Resources Inc.
    Georges-Yvan Gagnon - P. Geologist
    President and Chief Executive Officer
    819-275-2254 (FAX)