VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 09/24/12 -- The concerned shareholders (the "Concerned Shareholders") of Mosquito Consolidated Gold Mines Limited ("Mosquito" or the "Company") respond today to the misleading news release issued on September 21, 2012 by Mosquito's management. The Concerned Shareholders consist of Hongxue Fu, the former Chairman of the board of directors of Mosquito; Shaun Dykes, a geological engineer and former Exploration Manager and director of Mosquito; and International Energy & Mineral Resources Investment (Hong Kong) Company Limited, Mosquito's largest shareholder ("HK CO.").
Management states that your "investment in Mosquito is at risk as a result of the dissident's conduct." It is your turn to decide who has your best interests, current management or an experienced, dedicated and well-qualified group that is determined to steer Mosquito in the right direction to achieve its potential and increase shareholder value? Shareholders are asked to consider the following and question if your investment is actually at risk in the hands of current management and not with the Concerned Shareholders.
Serious Flaws in The Voting Procedures Used By Mosquito at the 2011 AGM
The Concerned Shareholders remind Mosquito shareholders that Mosquito's management was ordered to call and hold a shareholders' meeting on October 16, 2012 because the Supreme Court of British Columbia (the "Court") found that there were defects and irregularities in the voting process at the December 16, 2011 shareholder meeting (the "2011 Meeting") that had an oppressive and unfairly prejudicial effect on the Concerned Shareholders' right to a fair and transparent process at the 2011 Meeting. The intervention of a Court in Canada in a shareholders' meeting for a public company is extremely rare, and the Concerned Shareholders believe that this reflects the serious concerns the Court had in respect of how the 2011 Meeting was conducted and that the fact is that in the absence of irregularities and defects in the voting process, the Concerned Shareholder's slate would have been elected as the directors of Mosquito. All shareholders of Mosquito should be outraged about how management has conducted itself so inappropriately in respect of the 2011 Meeting, thereby embarrassing the Company and wasting corporate funds as a result. For further details about the Court's serious concerns relating to the 2011 Meeting, please refer to the Reasons for Judgment of The Honorable Madam Justice Fisher (the "Reasons for Judgment"), a copy of which can be found on www.msqconcern.com.
En Masse Resignations of Independent Directors
The Concerned Shareholders note the resignations of independent directors General Merrill McPeak, Paul Kessler and David Voyticky on July 24, 2012 due to their serious concerns of, and loss of confidence in, the Brian McClay led management team and ask Mosquito shareholders how can the Concerned Shareholders' concerns be considered "baseless" as characterized by Mosquito? Mosquito shareholders will remember that it was only late last year that Mosquito had proudly announced the appointment to the Board of General McPeak and Messrs. Kessler and Voyticky and that "all of (the three new directors had) broad and significant US regulatory and financing experience and contacts" and that they would "greatly assist Mosquito in both financing and elevating the Company to be attractive to institutional investors or development partners." These mass resignations are a new and significant development that has emerged since the 2011 Meeting and are proof of the Concerned Shareholders' corporate governance and financial-related concerns. The Concerned Shareholders urge Mosquito shareholders to come to their own conclusion about these concerns. For further particulars of the serious concerns of the Concerned Shareholders, please refer to the information circular (the "Concerned Shareholders' Proxy Circular") that the Concerned Shareholders have filed with Canadian securities regulators and mailed to all Mosquito shareholders, copies of which are available online at www.sedar.com and www.msqconcern.com.
Committee Report not Independent and Findings are Questionable
The Concerned Shareholders continue to question the thoroughness and independence of the prior "review" conducted by a committee of Mosquito's board of directors. The Concerned Shareholders have been informed that the committee's review was not conducted at arm's length from Brian McClay. Given General McPeak's resignation, one can reasonably conclude that General McPeak ultimately did not agree with the conclusions set out in the Committee Report. Therefore, the Concerned Shareholders are of the view that their concerns remain unresolved and they question how management can continue to rely upon the "review" and conclusions of the committee in light of the General McPeak's resignation. Clearly there were and continue to be unresolved serious concerns about how Mosquito is being managed under Brian McClay.
Court Finds No Merit in Mosquito's Submission Regarding the Concerned Shareholders Breach of Duties
Mosquito's management continues to allege that Hongxue Fu and Shaun Dykes have breached their duties to Mosquito and its shareholders by using information relating to Mosquito to prepare the dissident proxy circular sent to shareholders in respect of the 2011 Meeting and in its communications with shareholders before the 2011 Meeting. In Court, Mosquito argued unsuccessfully that the Concerned Shareholders should not be entitled to a remedy as a result of Mosquito's allegations of misconduct by the Concerned Shareholders. The Honourable Madam Justice Fisher, in the Reasons for Judgement, stated that the Court "found no merit in Mosquito's submission on this issue" and that "Mosquito has adduced no evidence that any of the information in the Dissident Circular or other communications to shareholders in respect of the December 16, 2011 AGM was in fact confidential or private information." In addition, Mosquito's allegation that Shaun Dykes "continues to refuse to return all the data compiled from the work done at CuMo" and that he is "not giving (the Company) access to its own drilling results" is entirely false. Mr. Dykes has in fact delivered to Mosquito all 36,886 files of data in a readable form that belonged to Mosquito. These false allegations against Mr. Fu and Mr. Dykes reflect the lack of credibility of current management.
Misleading September 13, 2012 News Release
Concerned Shareholders note that on September 13, 2012, Mosquito's management published a "news release" on the internet claiming an error had been made in the calculation of the CuMo Project's mineral resource estimate and that the error was attributable to Shaun Dykes; it is not a coincidence that on the same day Mosquito's management issued its management information circular for the Meeting. The Concerned Shareholders point out that independent geological consulting firms, and not Mr. Dykes, prepared and assumed legal responsibility for the mineral resource estimates. The Concerned Shareholders seriously doubt that the mineral resource estimates prepared by the independent geological consulting firms are incorrect. The Concerned Shareholders have retained a well-respected independent engineering firm to review the formulae used by the independent geological consulting firms to calculate the mineral resource estimates and the Concerned Shareholders will report the firm's findings once available. In light of management's distasteful and deliberate attempts to discredit Mr Dykes, Mr. Dykes has retained legal counsel to seek legal recourse against the individuals involved. The Concerned Shareholders find it incredulous and reflective of the desperation of Mosquito's management that they would try to discredit Mr. Dykes and inflict serious damage upon the reputation of Mosquito and significantly negatively impact the Company's share price.
Once you have reviewed the Concerned Shareholders' Proxy Circular, you will agree with the Concerned Shareholders that it's time to replace Brian McClay and his team. VOTE THE BLUE PROXY no later than October 11, 2012 at 2:00 pm (Pacific Time), in advance of the proxy voting deadline. Your vote is very important to the future of your investment in Mosquito no matter how many or how few shares you may own.
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IMPORTANT INFORMATION
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In some cases the procedures for voting your shares can be complicated and
time consuming.
In order to be deposited with Mosquito's registrar and transfer agent in
time to be used at the Meeting, your BLUEPROXY must be received by the
Concerned Shareholders' proxy solicitation agent, Laurel Hill Advisory
Group, prior to 2 p.m. (Pacific time) on October 11, 2012.
If you require assistance with voting, please direct your questions to
Laurel Hill Advisory Group at toll free 1-877-452-7184 (1-416-304-0211
collect) or by email at assistance@laurelhill.com.
Visit www.msqconcern.com for reasons to vote for change.
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