Georges-Yvan Gagnon, founder, president-CEO, and director of Augyva
Mining Resources Inc. (TSX VENTURE: AUV) ("Augyva"), and three
independent directors, Rene Dufour, Louis-Philippe Mendes, and
Robert Tremblay, wish to
i. advise shareholders of three recent initiatives undertaken by Augyva to
maximize company value
ii. clarify the current makeup of the Augyva board of directors (the "BOD")
and recent proceedings initiated with the Quebec Superior Court, and
iii.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 Rene 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-a-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 Rene 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, Rene
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 Rene 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 www.sedar.com. 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.
Contacts: 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 819-275-1614 819-275-2254 (FAX)
www.augyva.com