Mr. Allen Lone reports

AUGUSTA ANNOUNCES RESULTS FOR THE FIRST QUARTER AND CORPORATE UPDATE

Augusta Industries Inc. has released its financial results for the three months ending March 31, 2017. For the three months ending March 31, 2017, the corporation had revenues of $879,000, a decrease of $132,000 or 13 per cent as compared with the three months ending March 31, 2016.

Total loss from operations for the three months ending March 31, 2017, was $77,000 or zero per share, a decrease of $259,000 or 0.1 cent per share as compared with a gain of $182,000 or 0.1 cent per share for the three months ending March 31, 2016. Gross margin for the three months ending March 31, 2017, was 23 per cent, compared with 45 per cent for the three months ending March 31, 2016, due to the change in mix between Marcon and Fox-Tek sales during the period. The corporation also reduced its operating expenses in the three months ending March 31, 2017, to $277,000 from $279,000 for the same period in 2016.

"Although the corporation incurred a loss during the first quarter of 2017, the overall results are encouraging and reflects the success that the corporation has experienced in its sales effort in 2016. The corporation's operational loss of $77,000 for the quarter is amongst the lowest in any quarter apart from 2016," stated Allen Lone, president of the corporation. "The revenue was a result of the increased spending of the corporation's current clients and the addition of new clients through the quarter." There has been an increase in sales to the U.S. government by Marcon of $181,000 in the first quarter of 2017 compared with 2016, but Fox-Tek sales were lower by $313,000 during this period. To a large extent, the reason for large reduction in Fox-Tek sales in 2017 is due to a large hardware sale in the first quarter of 2016.

                CONSOLIDATED FINANCIAL HIGHLIGHTS                                   
                         (in thousands)
                                
                                      Three months ended March 31                        
                                             2017            2016
                                                        
Sales                                     $   879       $   1,011 
Cost of sales                                (679)           (550) 
Gross profit                                  200             461   
Expenses                                                
Research and development                      (37)            (36)
Selling                                        (7)             (8)
General and administrative                   (233)           (235)  
Total expenses                               (277)           (279) 
(Loss) income from operations                 (77)            182    

The financial statements, notes to the financial statements, and management's discussion and analysis for the three months ending March 31, 2017, are available on SEDAR.

Corporate update -- business development

Fox-Tek Canada Inc.

The company will continue to work closely with new and existing clients to strengthen and preserve the relationship in addition to developing new projects with new clients. The company continues to enhance the DMAT (data management and analysis tool) platform. The company has successfully negotiated with several clients new contracts for engineering services and data analysis for the year 2017 and beyond.

The company's chief executive officer and chief operations officer attended the Ontario Centres of Excellence (OCE) Discovery 2017 exhibition and conference in May, 2017. The company took the opportunity to introduce the technologies to both private and public organizations in addition to a number of capital market firms, and is working on postconference meetings with a number of the interested parties. The corporation is working closely with the Trans Africa Pipeline project (TAP) to provide non-intrusive sensing equipment which will verify the integrity of the pipeline composite at key locations. In addition to the non-intrusive sensing equipment, Fox-Tek will provide optical-based sensing technology which would allow TAP to monitor the right of way zones from possible third party intrusions. Fox-Tek, in association with one of the largest leak detection technology companies, TTK Canada, is marketing a leak detection system to a number of the company's clients in North America.

Fox-Tek has recently submitted quotation and bids to a number of clients. The list below does not include bids to third parties that fall under confidentiality agreements:

• Corrosion monitoring systems package to one of the company's largest long-standing clients in North America;
• Corrosion monitoring systems package for the East West pipeline project JPS1-1 in Saudi Arabia;
• Corrosion monitoring systems package for a United Arab Emirates firm working on a Dubai petroleum project;
• A package for a non-intrusive pressure monitoring systems for a tank farm in the United States;
• A technical and commercial bid for the Yibal Kuff project (YKP) in Oman.

Marcon International Inc.

Marcon has built an impressive pipeline of quotes in the first quarter of 2017. The company is witnessing increased bidding activity in both the first and second quarters of 2017. Majority of the larger bids and quotes for Marcon is time consuming both in preparation of the bidding process and with the client and the end-users. This is true in the case of the port authorities in Bangladesh as well as some of the larger bids in North America. Marcon has successfully signed numerous deals year to date and will continue to do so and update the public through periodic press releases.

About Augusta Industries Inc.

Through its wholly owned subsidiaries, Marcon and Fox-Tek, the corporation provides a variety of services and products to a number of clients.

Marcon is an industrial supply contractor servicing the energy sector and a number of U.S. government entities. Marcon's principal business is the sale and distribution of industrial parts and equipment (electrical, mechanical and instrumentation).

Fox-Tek develops non-intrusive asset health monitoring sensor systems for the oil and gas market to help operators track the thinning of pipelines and refinery vessels due to corrosion/erosion, strain due to bending/buckling, and process pressure and temperature.

We seek Safe Harbor.