Mr. Allen Lone reports

AUGUSTA INDUSTRIES ANNOUNCES PROPOSED SPIN-OUT TRANSACTION

Augusta Industries Inc. has entered into an amalgamation agreement dated Sept. 27, 2017, with Sensor Technologies Inc. Pursuant to the agreement, Sensor has agreed to purchase all of the issued and outstanding securities in the capital of Fox-Tek Canada Inc. for an aggregate purchase price of $25-million. The purchase price will be satisfied through the issuance of an aggregate 50 million common shares to the corporation. It is the intention of the corporation to distribute the Sensor shares, on a pro rata basis, to its shareholders.

The corporation would also like to announce that Sensor will undertake a private placement of subscription receipts at a price of 50 cents for aggregate gross proceeds of $3.5-million. If the sale of Fox-Tek is completed, the aggregate gross proceeds of the subscription receipt private placement will be used as working capital for Sensor.

Sensor is a private Ontario company that was incorporated solely to complete the proposed transaction and, as such, does not have any financial statements. Sensor is a non-arm's-length party as the sole director, officer and shareholder of Sensor is Jay Vieira, a director of the corporation. Pursuant to applicable securities law, the spinout transaction will be subject to the approval of disinterested shareholders of the corporation. Mr. Vieira does not own any common shares in the capital of the corporation and as such will not be receiving any benefit from the spinout transaction. The current issued and outstanding shares of Sensor is 100 common share, which will be cancelled on the completion of the spinout transaction. Upon completion of the spinout transaction, the Sensor shares will represent all of the issued and outstanding securities of Sensor.

"I am very pleased to announce this spinout transaction," said Allen Lone, chief executive officer of the corporation. "Through the sale of Fox-Tek to Sensor, the corporation is creating a stand-alone public company which has proven technology and approximately $3.5-million in working capital provided that Sensor completes its proposed private placement. This will give the corporation's shareholders an interest in two separate stand-alone companies while allowing the corporation to focus on its core business of industrial contracting services to various U.S. government entities and the oil and gas market."

The spinout transaction

Shareholders of the corporation will be asked to vote on the plan of arrangement pertaining to the spinout transaction at a special meeting of shareholders to be called by the corporation at a date to be determined by the directors of the corporation. The proposal to be presented to shareholders would result in the sale of Fox-Tek to Sensor and the distribution of all or a large portion of the Sensor shares to the corporation's shareholders on a pro rata basis. The corporation will establish a record date which will establish the corporation's shareholders who will be entitled to receive the Sensor shares pursuant to the plan of arrangement. Adequate advance notice of the effective date of the transaction and the share distribution record date will be provided in due course.

It is anticipated that Sensor will file an application with the TSX Venture Exchange to list its common shares through the facilities of the TSX-V.

The attached table shows some financial information pertaining to Fox-Tek for the year ended Dec. 31, 2016, and the six months ended June 30, 2017.

                Year ended Dec. 31, 2016    Six months ended June 30, 2017
                                (audited)                       (unaudited)

Sales                           $784,000                          $290,000
Expenses                        $540,435                          $179,000
Net profit                      $243,000                           $48,000
Assets                          $411,076                          $411,000
Liabilities                     $328,792                          $169,000

Benefits of the spinout transaction

The spinout is expected to provide certain benefits to the corporation's shareholders, including:

• Allowing shareholders to realize the full value of the corporation's main business and also to realize the potential of Fox-Tek's business through their holding of SpinCo common shares;
• Enhance the ability of the corporation and Fox-Tek to pursue their respective corporate objectives and strategies;
• The creation of two separate companies dedicated to the pursuit of their respective businesses will provide shareholders with additional investment flexibility as they will hold a direct interest in two separate companies that are at different stages of commercial development and focused on different objectives and strategies.

Conditions precedent

The spinout transaction, which is subject to shareholder and regulatory approval, including the acceptance for filing by the TSX-V and the Superior Court of Ontario, is expected to be implemented through a plan of arrangement under the Business Corporations Act (Ontario). Subject to the final approval of the corporation's directors in the fixing of the date of the special meeting of its shareholders, the corporation's shareholders will receive a management information circular with further details of the spinout transaction.

About Augusta Industries Inc.

Through its wholly owned subsidiaries, Marcon International Inc. 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.

Fox-Tek provides world-leading solutions to various sectors, including the oil and gas industry.

We seek Safe Harbor.