Augen Capital Reports 2010 First Quarter Results
May 27 2010 - 3:37PM
Marketwired Canada
Augen Capital Corp. ("Augen" or "the Company") (TSX VENTURE:AUG) today announced
its unaudited interim consolidated financial results for the first quarter ended
March 31, 2010.
In the quarter ended March 31, 2010, the Company reported income of $70,412
compared to income of $77,529 for the first quarter of 2009. The net loss was
$649,638 in the first quarter of 2010 compared to a net loss of $399,524 in same
quarter of 2009. In 2010, the Company reported an unrealized gain on investments
held for trading of $4,633 compared to an unrealized gain of $168,234 in 2009.
The net loss in 2010 was further increased by an income tax provision of $10,337
in the first quarter of 2010 compared to an income tax recovery of $189,300 in
the same quarter of 2009.
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. 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 150% since its low at the end of 2008 and
is demonstrated by the Company recording unrealized gains on its investments
held for trading for five consecutive quarters since 2008. The value of the MB
portfolio remains lower by approximately 36% 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 48% year-over-year
at March 31, 2010, 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 $89,190 in the first quarter of 2010 compared
to the first quarter of 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").
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Consolidated Statements of Operations and Comprehensive Earnings
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For the three
months ended
March 31, Merchant Banking Managed Products Total
2010 2009 2010 2009 2010 2009
$ $ $ $ $ $
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Income (loss) 66,941 45,703 3,471 31,826 70,412 77,529
Expenses 487,360 431,718 30,390 175,222 517,750 606,940
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Earnings
(loss) before
undernoted
items (420,419) (386,015) (26,919) (143,396) (447,338) (529,411)
Share of
(earnings)
loss and
capital
transactions
from equity-
accounted
investment 192,160 185,617 - - 192,160 185,617
Unrealized
(gain) loss
on
investments
held for
trading (4,633) (168,234) - - (4,633) (168,234)
Non-recurring
charges - 18,441 - 18,440 - 36,881
Amortization 3,992 2,575 444 2,574 4,436 5,149
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Earnings
(loss) before
income taxes (611,938) (424,414) (27,363) (164,410) (639,301) (588,824)
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Income taxes
Current (328) (14,066)
Future 10,665 (175,234)
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10,337 (189,300)
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Net earnings
(loss) and
comprehensive
earnings
(loss) (649,638) (399,524)
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Merchant Banking Portfolio
The Company's investment portfolio had a fair value of $1,608,191 as at March
31, 2010, having increased by $797,812 year-over-year, a 98% increase. As a
result of the increase in value of the MB portfolio and transactional activity,
the Company reported an unrealized gain on investments held for trading for five
consecutive quarters, and has reported a net realized gain for the quarter for
the first time since the recent global economic downturn of 2008; a realized
gain of $18,159 was reported during the quarter.
Investment in Augen Gold Corp. ("AGC")
Non-revolving secured loan facility
In November 2009, the Company 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 from the facility and that amount remained outstanding at the
end of March 31, 2010. Pursuant to the terms of the loan facility, the
outstanding loan balance of $269,432 plus accrued interest was repaid by AGC
from proceeds of its first closing of a brokered private placement on May 14,
2010. The loan settlement proceeds were held in trust until the security over
all the real and personal property of AGC including all the staked and patented
mining claims, was removed by the Company. The proceeds were released from trust
on May 20, 2010, at which time the security over all the real and personal
property of AGC including all the staked and patented mining claims was removed,
and accrued interest of $12,573 was paid to the Company.
Non-cash share of loss and capital transactions
The carrying amount of the Company's equity-accounted investment in AGC has
decreased since December 31, 2009 by $192,160 to $937,945 at March 31, 2010. The
decrease represents the Company's proportionate share of AGC's loss and capital
transactions for the quarter.
Effective May 20, 2010, as a result of the private placement completed by AGC,
the Company owns approximately 15% of the issued and outstanding common shares
of AGC. The Company's investment in AGC will no longer be accounted for under
CICA Handbook Section 3051 and will instead be accounted for as an investment
held for trading, as the Company no longer has significant influence over AGC.
This change will be reflected in the Company's financial statements for the
quarter ended June 30, 2010. Any variations between the current carrying value
and fair value of the investment will be reported in earnings as unrealized
appreciation or depreciation in the value of the investment.
As at May 26, 2010, based on the closing price per share, the market value of
the Company's investment in AGC was $1,843,042.
The full interim unaudited consolidated financial statements for the quarter
ended March 31, 2010 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.
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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