CALGARY, ALBERTA--(Marketwire - June 25, 2012) - Martin Ellis, a Concerned Shareholder of MGold Resources Inc. ("MGold"), announced today that he wishes to respond to the management news release of June 21, 2012.
By news release issued on June 14, 2012, the Concerned Shareholder gave notice that he is asking for shareholders of MGold to vote for a new board of directors at the upcoming annual general and special meeting of shareholders to be held on June 29, 2012, in Montreal, Quebec. Please review the letter and biographies of the highly qualified and experienced proposed nominees contained in the dissident proxy circular filed at: http://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00008614
Management went to great lengths in their news release to defend its record of management, suggesting that the expenditures under their stewardship were justified. It appears to all reasonable observers that the current trading price of $0.02 to $0.03 is the response of the market to current management's stewardship of the company.
The private placements referred to by management were conducted with some long term supporters of the company and a slate of new investors largely on the perceived prospectivity of the Silver Queen/Klondyke projects, based on representations from management as to the results to date from those projects and from the adjacent Allied Nevada project. Management has failed or neglected to provide information to investors since the funds were raised that would indicate otherwise, or would explain their decision to terminate the option after raising funds based on that option.
Furthermore, the investors were not advised that part of these funds would be used for retroactive pay ( or excessive current pay to make up for earlier periods ) to the CEO or other officers, which seems to be suggested by the management response. In fact, their response will lead to speculation that the company had insufficient resources to both proceed with the Silver Queen/Klondyke option and pay this retroactive and ongoing compensation. Investors in junior resource companies expect management to use limited cash resources principally for development of their projects while aligning the interests of management and the shareholders so both benefit from capital appreciation in their respective investments in the company.
The Concerned Shareholder has no confidence that the current management team will be able to raise additional financing for any project, having regard to their performance to date,. This problem, which is solely the responsibility of current management, is exacerbated by the fact that the current market price is under the minimum price ($0.05 per share) that a company may use when conducting an equity financing on the TSXV.
The non-cash expenses and expenses for investor relations activities highlighted by management as part of the company's general and administrative expenses are not significant in the context of the total expenses incurred and do not serve to explain why these expenses increased so significantly when the management time commitment, by all reasonable accounts, was reduced, not increased, after termination of the Silver Queen/Klondyke option.
As posted on the Macroaxis website, a reputable investment advisory website, the chance of bankruptcy is listed at 50%: "MGold Resources Inc. has a 50.0% chance of experiencing financial distress in the next 2 years of operations": http://www.macroaxis.com/invest/ratio/MNI.V--Probability_Of_Bankruptcy
We urge you to vote your GREEN proxy form in favour of the new team of experienced directors to protect your interests in MGold Resources Inc. They have a strong record of success and are committed to bringing leadership, integrity, improved corporate governance and value back to the shareholders of MGold.