VANCOUVER, British Columbia,
Dec. 13, 2011 /PRNewswire/
-- Mosquito Consolidated Gold Mines Limited (Mosquito - TSX
Venture: MSQ, OTC-QX: MQCMF) wishes to give clarity to the
misleading information being issued by the dissident group that
includes present Directors of Mosquito, Mr. Hongxue Fu and Mr. Shaun
Dykes neither of which is being nominated by the company for
re-election at the upcoming Annual General Meeting. The unsupported
and unfounded allegations levelled at the management of Mosquito
and its 100% owned subsidiary must be addressed.
CLAIM: Mosquito only spent 17.42% of $11 million raised on CuMo
It appears that the dissident group's primary concern is the
claim that of $11million raised by
Mosquito, only 17.42% has been spent on the CuMo project over the
past 15 months. Mosquito management has no way to know how these
figures were generated but they do not bare any resemblance to
fact. According to publicly available audited financial
statements:
- since the acquisition of the CuMo deposit in 2004 and up to
June 30th, 2011 (last audited
financials) Mosquito has invested $12,992,229 in exploration at CuMo.
- From June 2008 to June 2009 $3,754,000 was spent on exploration by
Mosquito.
- From June 2009 to June 2011 total share capital raised was
$10,292,297. During this 2 year
period, Mosquito's exploration expenses on CuMo totalled
$6,127,584.
In the documents sent out by the dissident group the cover sheet
presents a pie chart allegedly showing that of $11million spent by Mosquito only 17.42% was
spent on CuMo. This is not factual. Mosquito has directed over
60% of all funds raised during this period towards exploration of
CuMo and these calculations are supported by audited financial
statements.
Point by Point Rebuttal
In response to the news release issued by the Dissident Group on
December 12, 2011, Mosquito
management has taken excerpts from that release, which appears in
italics below. Management's responses are included below
each italicized point.
No answer to our concern that "Over 60% of money raised by
Mosquito in the period from March 1,
2010 to June 30, 2011 has been
spent on Kirkness, not the world-class asset, CuMo.
- At March 31, 2010 the exploration
balance of money spent at CuMo stood at $9,408,359, the total explorations spent up to
June 30th, 2011 was $12,992,229. For a total spent in the period of
$3,583,870.
- During this period Mosquito raised $3,897,384 which equates to 92% of that amount
being spent on CuMo by both Kirkness and Mosquito.
- In addition to the exploration costs, approximately
$300,000 was spent on support
infrastructure for CuMo, including a shop, warehouse, crew
accommodations and land located in Garden
Valley, Idaho (headquarters of the CuMo Project).
- Mosquito also has made a $400,000
option payment that is part of $800,000 paid on a total $1,200,000 purchase price for patented mineral
claims.
- When these funds ($710,000) are
added to the $3,583,870, the total
spent on the CuMo Project in this period was $4,293,870 or 110% of funds raised during this
period.
- These figures come directly from the consolidated financial
statements and include spending by both Mosquito and its wholly
owned subsidiary, Kirkness Drilling. These financial statements
were filed for the periods detailed and can be found on Sedar.com
for confirmation. These figures are far removed from the unfounded
and unsupported allegations of the Dissident Group.
No explanation as to why Kirkness Diamond Drilling loses so
much money, why Mr. McClay appointed his son as President of
Kirkness, and why Mr. McClay is not willing to sell Kirkness to
allow Mosquito to focus on CuMo.
As stated in the Incumbent management's press release of
December 9th 2011, much of the project-related expenses for
CuMo are incurred through Kirkness, which is the in-house and
wholly owned drilling contractor of the Company. Kirkness
represents a valuable subsidiary business which will likely
generate significant cost savings during the next phase of
exploration and development at CuMo.
No explanation of why Kirkness has 127 trucks when a drilling
company of this size should have 30 to 40 trucks or why Mosquito
owns an airplane and a truck "limo".
- Kirkness has 74 pickup trucks in its asset inventory list - not
127;
- Of those, 21 have been written off and have no residual
value;
- 19 of them have been depreciated to less than $5,000 and are used primarily for back-up or
spare parts,
- the remaining 34 trucks, which are valued at between
$5,000 and $20,000 comprise the fleet
of service vehicles which are necessary for activities at CuMo and
at other projects where Kirkness is engaged in contract diamond
drilling.
The aircraft which Mosquito owns is an important asset. The
aircraft, purchased for $130,000 in
2007, is capable of transporting 5 passengers on a trip from
Vancouver B.C. to Boise, Idaho (nearest centre to CuMo) in 2.5
hours at a fuel cost of around $600.
Commercial air travel, due to the lack of a direct flight between
the two cities, can typically take as long as 12 hours and cost
from $800 (coach) to $2000 (business) return. The use of private
aircraft and executive ground transportation for shuttling staff,
potential investors and financing partners to and from project
sites is not uncommon in the junior mining marketplace. The
Sprinter truck described in the dissenter's information as a "limo"
is a van with executive seating and in no manner should be
described as a "limo". The rationale for purchase was to transport
larger groups of potential investors to Mosquito's projects.
No meaningful response to our concern that many of the
drilling jobs that money-losing Kirkness does are for companies in
which Mr. McClay's family seems to have interests or some
relationship.
Kirkness is actively pursuing contract diamond drilling work for
profit, which is to the benefit of Mosquito and its shareholders.
Mr. McClay has used his network of contacts in the mining business
to help secure projects for Kirkness. Kirkness is presently cash
flow positive and would have been profitable if it were not for the
losses suffered and concessions granted to IEMR. Kirkness also
employs its drills at CuMo at cost or a small loss which enables
Mosquito to continuously explore and develop for much reduced costs
than other mining companies.
No response to our concern that Mr. McClay is not the right
person to raise much-needed financing for the CuMo Project and take
it to the next stage of development.
Incumbent management is seeking to add Mr. Paul Kessler to the company's board. Mr. Kessler
is a respected financier who has a history of financing and helping
turn around companies with large scale project having the capital
requirements of CuMo. Also nominated is David Voiticky, who has a
background as an Investment Banker with Goldman Sachs and is
experienced in large scale institutional level financings.
Incumbent management feels that the board slate nominated for
election at the Annual General Meeting has the skills and depth and
is capable and ready to secure financing and advance the CuMo
project in a manner that will greatly benefit Mosquito
shareholders.
Most importantly, no commitment to focus exclusively on CuMo
and no plan for getting the financing in place to develop this
great project!
It is the incumbent management's primary focus to continue to
finance the Company and significantly advance the CuMo project. The
CuMo deposit has been actively explored and advanced since its
acquisition by Mosquito in 2004. Mosquito's incumbent management
has never waivered in its commitment to develop the CuMo
Deposit.
Management describes Mr. Dykes as the "outgoing Exploration
Manager". Not only is this an inappropriate way to inform Mr. Dykes
of his impending termination but, more importantly, there is no
mention as to the succession plan.
Incumbent management feels that in light of the unsupportable
and completely false accusations levelled at the President and
other Directors and other actions contrary to the Company's best
interest, that no alternative is left but to replace Mr. Dykes.
Incumbent management have met with highly qualified candidates with
experience in geology, permitting and project management and will
select the appropriate candidates after this year's AGM.
To the Dissident Group's remaining concerns regarding board
independence and qualifications, incumbent management summarily
dismisses these as "sour grapes" from a disgruntled employee. The
suggestion that Mr. McClay has, in his back pocket, a former Chief
of Staff of the United States Air Force, and a former vice
president of Goldman-Sachs, is both distasteful and shows the
dissident's lack of business maturity.
YOUR VOTE IS IMPORTANT, REGARDLESS
OF HOW MANY SHARES YOU OWN.
Voting is a quick and simple process. To be sure your vote
is counted, your proxy must be received by 10:00 a.m. (Pacific Time) on December 14, 2011. Due to limited time
available, we strongly recommend voting by telephone or internet no
later than 24 hours before the deadline.
Shareholders who wish to vote their shares or require any
assistance in voting their Management proxy are encouraged to call
Mosquito's Proxy Solicitation Agent, Georgeson at:
North American Toll Free Number:
1-866-413-8828
Email: askus@georgeson.com
Please discard any BLUE proxy or related materials you may have
received from the Dissidents and vote using only the control number
on Management's proxy.
On Behalf of the Board
MOSQUITO CONSOLIDATED GOLD MINES LTD.
"Brian McClay"
Brian McClay
President
About Mosquito Consolidated Gold Mines
Mosquito Consolidated Gold Mines Limited is a mining exploration
and development company with a diverse portfolio of high potential
precious and base metals projects, located in North America. The Company's primary focus is
developing its Idaho-based CuMo
project, one of the world's largest molybdenum deposits. For more
information, please visit www.mosquitogold.com
THIS NEWS RELEASE WAS PREPARED BY MANAGEMENT WHO TAKES FULL
RESPONSIBILITY FOR ITS CONTENTS. THE TSX-VENTURE EXCHANGE
does not accept responsibility for the adequacy or accuracy of
this release.
This news release includes certain statements that express
management's expectation or estimates of future performance and may
be deemed "forward-looking statements". These forward-looking
statements include plans, estimates, forecasts and statements as to
management's expectations regarding the CuMo Project. These
forward-looking statements involve assumptions, risks and
uncertainties and actual results may vary materially. For
these reasons shareholders should not place undue reliance on such
forward-looking information.
United States residents are
cautioned that some of the information that may be published by
Mosquito may not be consistent with United States Securities and
Exchange Commission disclosure rules and may be materially
different from what the Company is permitted to disclose in
the United States and therefore
United States residents should not
rely on such information.
MOSQUITO CONSOLIDATED GOLD MINES
LTD.
MSQ-TSX-VENTURE
Tel: 604-689-7902 WWW.MOSQUITOGOLD.COM FAX: 604-689-7816
Mosquito Consolidated Gold Mines
Limited : 1-800-667-0873
SOURCE Mosquito Consolidated Gold Mines Limited