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Trelawney Mining boosts offer for Augen Gold

Published: 18:38 26 Aug 2011 BST

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Trelawney Mining and Exploration (CVE:TRR) announced Friday it has increased its offer to acquire Augen Gold Corp (CVE:GLD) to $49.3 million, with Auguen's board approving the new deal.

Trelawney's all-share offer now consists of 0.0862 of a Trelawney share for every one Augen share held.  Based on Trelawney's August 25 closing price, the latest proposal values each Augen share at 34 cents each, a 14% discount to the company's Thursday closing price.

Still, the current offer represents a 26% premium to Augen's shares as of July 8, the last trading day before the initial offer.

The company's original price for Augen, announced on July 11, consisted of 0.066 of a common share of Trelawney, valuing Augen at 32 cents per share. However, since then, Augen shares have moved up over 46% on the TSX-Venture Exchange.

Trelawney shares are trading at $3.94 each, down 0.76% on Friday, while Augen shares have shed 10.13%, trading at $0.36 per share.

"I am pleased that, following extensive negotiations, we were able to reach a support agreement with Augen Gold's Board of Directors," said Trelawney president and CEO, Greg Gibson.

"This is an exciting transaction for shareholders of both companies who stand to benefit from the optimal development of the Cote Lake deposit and an expanded, contiguous land package."

If the acquisition is approved, Ontario-focused junior miner Trelawney is set to gain access to Augen's 23,685 hectares of staked and patented mining claims in the Southern Swayze Greenstone Belt in southern Ontario.

Augen's claims cover a 45-kilometre long section of the Rideout Deformation zone, believed to be the western extension of the Kirkland Lake/Larder Lake Break.

Also in southern Ontario on the same Southern Swayze Belt, Trelawney has been advancing the exploration and development of its Cote Lake deposit, located between Sudbury and Timmins.

To date, 47 holes totaling 23,500 metres have been drilled on the deposit. Grades average between one and two grams per tonne gold, over intervals up to and locally greater than 200 metres. Mineralization remains open along strike and to depth in all sections.

Trelawney has extended the offer's expiration to 5:00 pm EDT on September 12, and has entered a lock-up agreement with Augen, whereby 53% of Augen's shareholders have agreed support the deal.

The offer also provides for a $2.0 million break fee to Trelawney.

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