Augen Capital Corp. - Report to Shareholders on Audited Statements for Fiscal Year ending February 28/98.

TORONTO--(BUSINESS WIRE)--July 23, 1998--Augen Capital Corp.(Alberta Stock Exchange:AUG.) As we approach our fourth year from incorporation and enter our second year as a listed company, it is important to take stock of accomplishments when viewing objectives and obstacles. Progress may never be as swift as we wish, but the most modest achievements compounded over time can produce spectacular results.

This year revenues increased 33 percent to $1,304,915, and earnings, before taxes and write downs, were within 2 percent of the previous year. Fiscal 1997/98 records the first full year of operating as a public company and Augen incurred new expenses such as transfer agent and stock exchange fees as well as information distribution costs, plus additional legal, accounting & audit. The net effect is a 10 percent decrease in earnings after tax to $216,122.

Cash flow, however increased 61 percent to $403,591 from $250,835 in 1996/97. This amounts to $0.03 per share, and owing to the market's expectation of a 20 times multiple on cash flow of growth companies, this would place a value of $0.60 per share for Augen's common stock price.

Fair value of the company's financial instruments (see note 11 to statements) is $6,875,929 as at Feb. 28, 1998. Therefore fair value per share is $0.43, and is a substantive increase (90 percent) from last year. Growth companies trade at 2 to 6 times assets and therefore the upside potential in our share price is quite attractive. There are some 5 to 10 listed merchant banks in Canada, most of which are larger, but Augen's common share price outperformed most of this group.

We have exceeded our objective of increasing assets by more than 40 percent per annum in a year rife with disappointment in the junior resource sector, most notably numerous 'salting' scandals, falling gold prices and a general softening of demand for base metals. The principal contributors to our success were investments in Foran Mining Corporation, Millstream Mines Limited and Orogrande Resources Inc., all of which have significant massive sulfide occurrences on their properties. In all three cases the investment objective was to provide funds for ore reserve addition, using and applying sound geological theory.

The Tyrrell township gold property of Orogrande Resources Inc. shows all the characteristics of being open pittable in nature with gold bearing drill intersections of up to 56m in a structure with a strike length of 6.5 kilometers. Gold targets of this size are comparable, in potential exploration reward versus risk, to massive sulfide type of deposits.

In March 1998, Augen paid its first dividend, giving shareholders a choice between receiving either 2.50 shares for every 100 shares held, or a cash dividend of $0.01 per share, for a yield of 2.20 percent. It is your company's intention to pay an annual dividend with a projected yield exceeding that of blue-chip Canadian resource stocks. The dividend yield as it stands is larger than the majority of Canadian resource firms or mutual funds, which by virtue of a challenging year had few capital gains to pay out. Just five mineral and metal firms in Canada pay a higher dividend rate, and Augen only has to exceed 5 percent to establish leadership for dividend returns.

Two other milestones promised for this fiscal year have been achieved: Augen now has a 12-G exemption to trade in the United States, and Augen is now an exempt purchaser for purposes of financing in Ontario. The latter exemption recognizes Augen's status as a financial institution and gives us more flexibility in negotiations with resource companies.

On behalf of Augen's board of Directors and Management, we would like to thank our shareholders for their support.

J. David Mason, M. Eng. Chairman & C.E.O.

The Alberta Stock Exchange has neither approved or disapproved the information contained herein.

    CONTACT:  Augen Capital Corp.
               J. David Mason, 416/ 777-2007
               416/ 777-2008 or [phone] (FAX)
               [phone] (Toll free - Canada)