Augen Capital Corp. ("Augen" or "the Company") (TSX VENTURE:AUG) today announced
its audited consolidated financial results for the year ended December 31, 2009.
The Company reported a loss of $2,584,563 for the year ended December 31, 2009
compared to a loss of $3,512,350 for the 2008 year. 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. The recent global economic and capital market challenges
of 2008 and early 2009 have had a significant impact on the Company's ability to
generate income, demonstrated by the reduction of $1,581,187 in income generated
for 2009.
Management believes the current general market conditions have improved and
expects the recent trend of improvement in the Company's MB investment portfolio
to continue in 2010. The MB investment portfolio has recovered by 149% since its
low at the end of 2008, which has contributed to the reduction of $2,169,366 in
net loss before income taxes. The value of the MB portfolio remains off by
approximately 37% from the levels prior to the recent global economic downturn
which started on or around Q2 2008, and is the result of fluctuations in fair
value of the portfolio and transactional activity.
The Managed Products (MP) consulting asset base declined by 36% year-over-year
at December 31, 2009, 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. Further, Augen has not offered or
consulted on any new flow-through limited partnerships since mid-2008.
Consolidated expenses decreased by $563,383 in 2009. A key factor which
contributed to the reduction in consolidated expenses was that the Company was
able to cap certain operational expenses pursuant to the Management Agreement
entered into with OreReserve Asset Management Inc. ("OreReserve"). The reduction
in consolidated expenses was offset by the Company's share of loss and capital
transactions from its equity-accounted investment in Augen Gold Corp. (TSX
VENTURE:GLD) along with a permanent impairment in the carrying value of the
investment, which combined totaled $1,245,190.
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Consolidated Statements of Operations and Comprehensive Earnings
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Merchant Banking Managed Products
For the years ended December 31, 2009 2008 2009 2008
$ $ $ $
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Income (loss) (164,012) 610,629 118,307 924,853
Expenses 1,418,189 1,430,260 764,932 1,316,244
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Earnings (loss) before
undernoted items (1,582,201) (819,631) (646,625) (391,391)
Share of (earnings) loss and
capital transactions, and
impairment loss from equity-
accounted investment 1,245,190 (464,970) - -
Unrealized (gain) loss on
investments held for trading (1,393,492) 3,246,331 - -
Non-recurring charges 19,480 257,438 19,479 257,438
Adjustment to fair value of
liabilities - (220,380) - -
Amortization 10,297 11,283 10,298 11,282
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Earnings (loss) before income
taxes (1,463,676) (3,649,333) (676,402) (660,111)
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Income taxes
Current
Future
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Net earnings (loss) and comprehensive
earnings (loss)
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Total
For the years ended December 31, 2009 2008
$ $
--------------------------------------------------------
--------------------------------------------------------
Income (loss) (45,705) 1,535,482
Expenses 2,183,121 2,746,504
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Earnings (loss) before
undernoted items (2,228,826) (1,211,022)
Share of (earnings) loss and
capital transactions, and
impairment loss from equity-
accounted investment 1,245,190 (464,970)
Unrealized (gain) loss on
investments held for trading (1,393,492) 3,246,331
Non-recurring charges 38,959 514,876
Adjustment to fair value of
liabilities - (220,380)
Amortization 20,595 22,565
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Earnings (loss) before income
taxes (2,140,078) (4,309,444)
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Income taxes
Current (26,444) (378,730)
Future 470,929 (418,364)
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444,485 (797,094)
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Net earnings (loss) and
comprehensive earnings (loss) (2,584,563) (3,512,350)
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For the three month period ended December 31, 2009, Augen's net loss was
$1,204,479 compared to $554,983 in the same period in 2008. The Company
generated $339,211 less income in the fourth quarter of 2009 compared to the
fourth quarter of 2008 for similar reasons as described above. Consolidated
expenses declined by $188,888 in 2009, primarily as a result of the Management
Agreement between the Company and OreReserve, as discussed above. The Company
reported an unrealized gain in the MB investment portfolio of $311,486 in 2009
compared to an unrealized loss of $725,293 in 2008, which reflects the recent
trend of recovery in the MB investment portfolio. The Company recorded a
non-cash change in the valuation allowance for future income taxes of $911,389
in 2009, which had a significant negative impact on the 2009 results.
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Consolidated Statements of Operations and Comprehensive Earnings
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For the three months ended Merchant Banking Managed Products
December 31, 2009 2008 2009 2008
$ $ $ $
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Income (loss) (26,676) 43,668 20,140 289,007
Expenses 309,074 385,037 241,413 354,338
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Earnings (loss) before
undernoted items (335,750) (341,369) (221,273) (65,331)
Share of (earnings) loss and
capital transactions from
equity-accounted investment 21,796 (471,644) - -
Unrealized (gain) loss on
investments held for trading (311,486) 725,293 - -
Amortization 2,574 2,440 2,575 2,439
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Earnings (loss) before income
taxes (48,634) (597,458) (223,848) (67,770)
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Income taxes
Current
Future
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Net earnings (loss) and
comprehensive earnings (loss)
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Total
For the three months ended
December 31, 2009 2008
$ $
----------------------------------------------------------
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Income (loss) (6,536) 332,675
Expenses 550,487 739,375
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Earnings (loss) before
undernoted items (557,023) (406,700)
Share of (earnings) loss and
capital transactions from
equity-accounted investment 21,796 (471,644)
Unrealized (gain) loss on
investments held for trading (311,486) 725,293
Amortization 5,149 4,879
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Earnings (loss) before income
taxes (272,482) (665,228)
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Income taxes
Current (11,103) (55,745)
Future 943,100 (54,500)
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931,997 (110,245)
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Net earnings (loss) and
comprehensive earnings (loss) (1,204,479) (554,983)
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Merchant Banking Portfolio
The Company's investment portfolio had a fair value of $1,601,793 as at December
31, 2009, having increased by $959,648 since December 31, 2008, a 149% increase.
As a result of the increase in value of the MB portfolio and transactional
activity during the year, the Company reported a net realized and unrealized
gain of $1,393,492 for the year ended December 31, 2009, compared to a net
realized and unrealized loss of $3,246,331 during the same period in 2008.
Investment in Augen Gold Corp. ("AGC")
Non-revolving secured loan facility
In November 2009, the Company announced that it agreed to provide a
non-revolving secured loan facility to a maximum of $1,100,000 to AGC at an
interest rate of 12% per annum. AGC drew $269,432 under this facility and that
amount remains outstanding and is due and payable by November 24, 2010. Under
the terms of the facility, as long as any amount remains outstanding, AGC is
required to repay the outstanding principal and interest in an amount of up to
one-half of funds that AGC raises from any source.
Impairment loss
The carrying amount of the Company's equity-accounted investment in AGC has
decreased since December 31, 2008 by $123,339 of which an increase of $1,121,851
represents the shares-for-debt conversion of an amount due from AGC which is
discussed below, partially offset by $279,186 which represents the Company's
proportionate share of AGC's loss and capital transactions for the year and
further offset by $966,004 which represents a loss in the carrying value of the
investment. At September 30, 2009, the Company assessed the carrying value of
its investment in AGC and determined that a decline in the carrying value which
was other than temporary had occurred and as such, the impairment loss of
$966,004 was recorded. As at April 29, 2010, based on the closing price per
share, the market value of the Company's investment in AGC was $2,303,802.
Shares-for-debt transaction
At a special meeting of the shareholders of AGC held on March 13, 2009, AGC
shareholders approved a shares-for-debt transaction for the conversion of debt
owed by AGC to Augen Capital Corp., into common shares. On April 7, 2009, AGC
issued 7,479,010 common shares to settle $1,121,851 of debt. Augen Capital Corp.
now owns 11,519,010 shares of AGC or approximately 23.1% of the currently issued
and outstanding common shares of AGC.
The full audited consolidated financial statements for the year ended December
31, 2009 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
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