From: Ong, Raymond
Subject: NEWS RELEASE FOR IMMEDIATE DISSEMINATION
PLAIN TEXT:
Please see attached news release for IMMEDIATE DISSEMINATION.
Thank you.
Raymond Ong
Paralegal
T 604-891-2708
raymond.ong@gowlings.com <mailto:raymond.ong@gowlings.com>
________________________________
Gowling Lafleur Henderson LLP
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File: VAN_LAW-#1058783.pdf
CONCERNED SHAREHOLDERS PLEASED TO REPORT FURTHER CONFIRMATION OF
VALIDITY OF CUMO RESOURCE ESTIMATE AND ENCOURAGE SHAREHOLDERS TO
NOT BE INTIMIDATED BY MANAGEMENT'S DESPERATE SCARE TACTICS
For immediate release
Vancouver, B.C., October 5, 2012. The Concerned Shareholders of Mosquito Consolidated Gold Mines
Limited ("Mosquito") are extremely pleased with the level of support they have received from fellow
concerned Mosquito shareholders, who share the belief that it's time to replace the Brian McClay-led
Board of Directors and management team with the Concerned Shareholders' nominees at the upcoming
October 16 shareholder meeting.
Earlier this week, the Concerned Shareholders reported that an independent engineer and metallurgist had
confirmed that, contrary to Mosquito's September 13, 2012 news release, the formulas used to calculate
the recovered molybdenum value included in Snowden's CuMo Project mineral resource estimate of June
2011 were correct. The Concerned Shareholders have also subsequently received written
confirmation from the independent engineering consulting firm responsible for the 2009
preliminary economic assessment (the "2009 PEA") that they do not believe that they have to make
any change to the 2009 PEA report and that they have said so repeatedly to Mosquito management.
Additionally, they state that there is no error in the work that they have done. It is completely
irresponsible, unacceptable and inexcusable for Mosquito management to have called into question the
validity of the mineral resource estimate for the CuMo Project (and thereby significantly hurt Mosquito's
share price and damage Mosquito's reputation) without first receiving definitive independent
confirmation of this and in light of the firm responsible for the 2009 PEA repeatedly advising Mosquito
management that they did not believe there was an error in their work.
The Concerned Shareholders also respond to the rambling "news release" issued by Mosquito's
management on October 4, 2012, which contains many incorrect statements and mischaracterizations of
facts that its credibility, and that of management, should be called into question. One of the Concerned
Shareholders, Mr. Hongxue Fu, considers the derogatory statements about him to be entirely without
merit. For one, his company, International Energy & Mineral Resources (Hong Kong) Company Limited
("HK CO."), acquired all of its 13,256,666 Mosquito common shares pursuant to private placements with
Mosquito and at subscription prices agreed to by Mosquito's management and board, under Brian
McClay's direction. When HK CO. made its investment, Mr. Fu was prepared to entrust Brian McClay
with managing Mosquito in the best interests of shareholders. However, Mr. Fu developed serious
concerns about how Mosquito was being managed under Brian McClay, and this led to Mr. Fu seeking to
replace Mr. McClay and his team.
In addition, Mr. Fu has not "thwarted outside investment" but instead, due his excellent profile and
reputation in Asia, Europe and North America, has been able to bring significant CuMo project financing
opportunities to Mosquito and has introduced several high profile strategic and institutional investors to
Brian McClay. Discussions with these potential investors did not culminate in an investment in Mosquito
largely as a result of concerns with Mr. McClay, including with his management style, with some of his
negotiating tactics and with his general lack of technical understanding of the CuMo Project.
The Concerned Shareholders note that management's allegations involving Mr. Fu are very
surprising in light of Brian McClay having recently flown to Beijing on his own initiative to try to
negotiate a deal with Mr. Fu pursuant to which McClay was prepared to hand over control of the
board. Mr. Fu refused Mr. McClay's offer.
The Concerned Shareholders see clearly that Mosquito's management is engaging in unsubstantiated fear-
mongering of a creeping takeover, and this is consistent with the disreputable conduct of the Brian
McClay led management throughout the proxy-solicitation period. The Concerned Shareholders note that
Mosquito shareholders have the right at the next annual general meeting to vote upon the continued
2
existence of Mosquito's shareholder rights plan: under the terms of the plan, the Board (including the
Board which would be comprised of the Concerned Shareholders' nominees) must submit for
independent Mosquito shareholder approval a resolution ratifying the continued existence of plan. The
Concerned Shareholders also point out that Canadian securities laws, as well as the policies of the TSX
Venture Exchange and the Toronto Stock Exchange, contain provisions which regulate the acquisition of
control blocks (ie. 20% or greater) of reporting issuers such as Mosquito. In either case, shareholders
would get their say, either by way of the ability to accept or reject a formal takeover bid, or by
minority shareholder approval at a shareholders meeting, before any takeover of Mosquito could
occur.
The Concerned Shareholders have previously described the serious financial and corporate-governance
related concerns arising under Brian McClay's management, which led to the resignation of three
independent directors, and the allocation of Mosquito's funds to money -losing Kirkness Diamond
Drilling rather than to Mosquito's flagship asset, the CuMo project. Mosquito's management and board
continue to rely upon the findings of its "special committee", when in fact there is strong evidence to
indicate that the committee was not independent because it did not operate at arm's length from Brian
McClay. There are also serious concerns about whether all members of the special committee agreed
with the findings and conclusions of the committee, given that General Merrill McPeak, a member of the
special committee and then Chair of the Board, had stated after the report of the special committee was
delivered that the committee was still considering the concerns raised by Shaun Dykes. General McPeak,
along with Paul Kessler and David Voyticky, subsequently resigned from the Board a few months later
after they had developed serious concerns about how Brian McClay and his management team were
directing Mosquito. In light of the special committee not operating at arm's length to Brian McClay, and
the resignations of General McPeak and two other independent directors, the Concerned Shareholders
strongly believe that the special committee's findings and conclusions are tainted and should not be given
any merit.
Please refer to the information circular of the Concerned Shareholders dated September 19, 2012 and the
letter to Mosquito shareholders dated October 3, 2012, both of which the Concerned Shareholders have
sent to shareholders for details of some of the significant corporate governance and financial-related
concerns that have caused them to try to effect change at Mosquito. Copies of these documents can be
found at www.msqconcern.com.
The Concerned Shareholders are of the view that the latest news release issued by Mosquito's
management is a clear attempt by Brian McClay to retain control of management by deflecting
well-deserved attention and scrutiny away from the serious governance and financial problems
occurring under his leadership by using unjustified and baseless attacks on professionals who are
acting in the best interests of all shareholders. Mr. McClay and his management team must be held
accountable for their unacceptable and deceptive behaviour during this proxy solicitation process,
including wrongly discrediting Shaun Dykes with accusations that have been found to be entirely
incorrect at the price of causing serious harm to Mosquito and the interests of all shareholders, and
for fear-mongering with respect to a Chinese creeping takeover while Mr. McClay secretly
travelled to China to work out a deal with Mr. Fu. These and the many serious concerns already
raised by the Concerned Shareholders provide ample support and justification for the immediate
replacement of Brian McClay and his team.
The Concerned Shareholders offer Mosquito shareholders an alternative, a new slate of
experienced and well-qualified directors whose interests are aligned with shareholders. This is the
time to hold current management responsible. We urge you to join your fellow concerned
shareholders to help us steer Mosquito to reach its full potential and unleash shareholder value by
voting the BLUE proxy FOR all the Concerned Shareholder's nominees.
3
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.
The Concerned Shareholders sincerely thank shareholders for their tremendous support in effecting
needed change at Mosquito.
IMPORTANT INFORMATION
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 BLUE PROXY 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.
Also visit www.msqconcern.com for reasons to vote for change.
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