Mosquito Mails Letter Alerting Shareholders to Dissident Shareholder Hongxue Fu's Attempt to Take Control of Mosquito

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct 4, 2012) - Mosquito Consolidated Gold Mines Ltd. ("Mosquito" or the "Company") (TSX VENTURE:MSQ) today announced that it has mailed a letter to shareholders that exposes dissident shareholder Hongxue Fu''s continuing attempt to take control of Mosquito.

The letter details how Mr. Fu established a large position on the cheap and is attempting to build his position in Mosquito at shareholders'' expense. In fact, Mr. Fu proposed a scheme in 2011 to build a 33% position in Mosquito at a considerable discount, at the same time thwarting outside investment by insisting investors pay a significant premium. Mosquito CEO Brian McClay exposed Mr. Fu''s scheme in June of 2011 - a scheme that even Mr. Fu''s dissident colleague Shaun Dykes called a "non-starter" and a "double standard". The full text of the letter is included below.

Leading Proxy Voting Firms Support Mosquito

In the past week, momentum continued to build in support of the management slate of director nominees as leading international corporate governance and analysis and proxy voting firms Institutional Shareholder Services ("ISS") and Glass, Lewis & Co., both recommended that shareholders vote FOR Mosquito''s director nominees on the GOLD proxy. Press releases summarizing the proxy advisors'' rationale for these recommendations can be viewed at www.mosquitogold.com.

Mosquito''s letter to shareholders follows:

Dear fellow shareholder,

Since the December 2011 ambush attempt by dissident shareholder and former Mosquito director Hongxue Fu, Mosquito''s management and I have provided facts about our activities, and our plans to move the company forward. The dissidents have responded with a continued campaign of misinformation. It is now clearer than ever why you need to vote your GOLD proxy in favour of management.

Don''t just take my word for it. Institutional Shareholder Services ("ISS"), a leading independent international corporate governance analysis and proxy voting firm, has also recommended that shareholders vote FOR management on their GOLD proxy, while noting a number of serious concerns with the dissident approach and slate of director nominees (See Mosquito''s October 1 press release for information on ISS and its recommendation).

Among the most serious concerns expressed by ISS were its conclusions concerning the dissidents seeking disproportionate control of the Board and questions regarding the independence of the dissident director nominees. Mosquito agrees with this analysis.

Hongxue Fu continues to seek control of Mosquito at the expense of its shareholders.

The above statement is alarming, but undeniable facts expose Mr. Fu''s objective. Mr. Fu has carefully selected certain individuals for his dissident slate of director nominees as they stand to personally benefit from inclusion on your Board. Some of these individuals also have dismal histories with your Company, as highlighted below.

The good news for shareholders is that the end is in sight. Shareholders are in a position to save Mosquito from control by Mr. Fu. This would allow management to secure financing, a process that has been directly impeded by Mr. Fu, and continue moving our flagship CUMO project forward. After all, this is about creating value for all shareholders.

Mr. Fu is Adept at Arranging Financing…For Himself

Mr. Fu became involved with Mosquito a number of years ago. With an opaque background as a lower-level functionary in the Chinese government, he positioned himself as someone who could help Mosquito deliver value to shareholders. Mr. Fu claimed valuable connections and relationships, but in all his years of involvement with your Company, he never introduced any parties that resulted in a financing or other opportunity for Mosquito.

However, Mr. Fu proved adept at arranging opportunistic financings for himself. In 2009, at the height of the market meltdown, Mr. Fu and his associated companies participated in four financings for a total of 11,226,386 Common Shares in Mosquito, all at a significant discount to the value of Mosquito''s Common Shares at that time. Conversely, when Mosquito was presented with opportunities to secure vital investment from outside parties, he demanded such significant premiums that those investors balked.

Following the completion of his discounted financings, Mr. Fu did nothing to further Mosquito''s interests. Residing in Beijing, China, he rarely travelled to North America. He never visited the CUMO site. On the few occasions that he did have something to say, he was a disruptive presence, communicating entirely through his translator and employee at IEMR Resources (IEMR), Mr. Long Wang. Mr. Fu has never participated in person at a Mosquito Board meeting, and has never attended a Mosquito AGM.

However, Mr. Fu was scheming for himself. He had a plan, and in June 2011, any doubts regarding Mr. Fu''s intentions were removed.

Mr. Fu Attempts to take Control of Mosquito in June 2011

Following the completion of his financings in 2009, Mr. Fu opposed potential financings with other parties, on the rare occasions that he participated (by phone) in a Board meeting. Despite this opposition, Mosquito was able to complete the financings, benefiting the Company and its shareholders by securing better terms than the discounted financings Mr. Fu had taken advantage of.

The reason for Mr. Fu''s opposition to other financings became clear when in June 2011, Mr. Fu proposed to establish a control position of 33% in Mosquito through a $15 million private placement with Mosquito at a discount to the then share price of approximately $0.65. Other demands attached to Mr. Fu''s proposal included changing the composition of the Board to six directors, three of whom would be selected by Mr. Fu himself.

I delivered Mr. Fu''s proposal to the Board of Directors and provided my thoughts via email:

Date: June 1, 2011

To: Board of Directors
From: Brian McClay
Subject: Mosquito Board of Directors

"…I personally am not in favour of this for a number of reasons starting with the price. Fu has steadfastly opposed any financing to be done under $1.25 with the other parties I have been negotiating with but now is proposing financing for his own interests for de facto control of the company (about 33%) for a fraction of the intrinsic value. I do not feel it to be acceptable for him to place his interests ahead of the shareholders and the Company…"

I then discussed the status of discussions regarding six other potential funding groups. It is my hope that Mosquito can re-engage with some of these parties once Mr. Fu and his associates have ceased disrupting the Company''s affairs and allow us to move forward with the CUMO project.

Former Director and current dissident director nominee Shaun Dykes responded to my email later that day with his opinion:

To: Board of Directors
From: Shaun Dykes
Subject: Re: Mosquito Board of Directors

"…Financing proposals:

…I think Fu''s deal is a non starter, it is opportunistic to say the least and his insistence of a $1.25 for others smacks of a double standard…"

Dissident director nominee Shaun Dykes'' indictment of his patron Mr. Fu is revealing, and reflects the degree to which even Fu''s allies viewed his dealings as being unfair.

This incident marked a turning point in the relationship between Mr. Fu and the other directors. I challenged Mr. Fu''s pattern of putting his own interests ahead of those of other shareholders, and this concern was shared by other directors, including Mr. Dykes. Mr. Fu''s proposals of discounted financing for himself while demanding a more than 90% premium from outsiders were contrary to the interest of the Company and of all shareholders but himself.

Further Evidence of a "Creeping Take-over"

Mosquito management became aware that Mr. Fu was making enquiries of other holders to see if they would be willing to sell their shares and hence allow Mr. Fu to increase his holdings and possibly get control of Mosquito, including potentially making "off-shore" acquisitions of shares, which could be made without triggering Canadian securities take-over requirements.

Thankfully, management of Mosquito had the foresight to implement a Shareholder Rights Plan that would preclude any holder from acquiring more than 20% of shares without making an offer to all shareholders, or negotiating a fair transaction with management. Thanks to this Plan, Mr. Fu''s designs on a "creeping" take-over have been held in check to this point.

However, for the Rights Plan to remain in effect it needs to be voted on again at this year''s AGM. As you know from our Information Circular, we tried to get Mr. Fu to agree to avoid the prospect of yet another shareholders'' meeting this year (yes, another one after this meeting), but he refused and fought us in court on that entirely rational request.

Why would he object to saving the Company and its shareholders time and money? If Mr. Fu and his nominees are elected, they could simply decide not to renew the Rights Plan, leaving Mosquito open to a creeping take-over or any other coercive or improvident acquisition proposal that may be made.

ISS also raised the alarm about Mr. Fu''s scheming for control:

"If the dissidents were elected, the major shareholder (17.4% stake) would have a somewhat disproportionate 33.3% or 50% board representation…which is not warranted in the circumstances."

ISS Report, ISS Proxy Advisory Services, September 28, 2012

In fact, as we describe later in this letter, we believe that the dissidents would control close to 100% of the Board that they have nominated. There can be no doubt that they have in fact proposed to remove 100% of the current directors, immediately erasing all of the combined experience of the current Board and management team. This is usually only achieved via a take-over of a company and a corresponding premium paid to all shareholders for this extraordinary right.

Consider the likelihood of this ploy with the fact that the dissident group has already tried to get Mosquito to pay the costs of their self-interested campaign. Imagine the possibility of the dissidents being elected to the Board, and then without a Rights Plan in place, agreeing to pick up the dissidents'' expenses. How could the Board cover these significant expenses? By issuing shares at a steep discount. The prospects for shareholders under that scenario would be dim indeed.

Mr. Fu and his Cronies Attack

Beyond the above-noted scheme, in December of 2011, Messrs. Fu and Dykes made a number of allegations regarding Mosquito and members of the Board and management team. As discussed in Mosquito''s Information Circular, the Board of Directors promptly formed a Special Committee of independent directors to investigate these claims. The Committee included former Director, General Merrill McPeak:

"After review and discussion, the Special Committee concludes there is no indication of improper or illegal action by Mr. McClay. On the other hand, the allegations made by Mr. Dykes seem frivolous and without foundation"

"Report of the Special Committee", December 12, 2011.

At this point former directors General Merrill McPeak, Paul Kessler and David Voyticky, and the other directors, decided that given Mr. Fu''s self-serving actions, and Messrs. Dykes'' and Fu''s frivolous allegations, the involvement of Dykes and Fu as directors was no longer tenable. Accordingly, Messrs. Dykes and Fu were not nominated for re-election to your Board of Directors.

With their self-interest clearly denied by the Board, on December 7, 2011 disgraced former directors Fu and Dykes, along with Mr. Wang, attempted to rebrand themselves as "the Concerned Shareholders" and launched their ambush of Mosquito.

I respectfully submit that Mr. Fu is indeed a "Concerned Shareholder." Unfortunately, his track record demonstrates that his concern begins and ends with his own interests - not those of all shareholders.

Mr. Dykes failed shareholders of two companies, but his interests are aligned with Mr. Fu''s

Shaun Dykes was Mosquito''s Exploration Manager through his company Geologic Systems Ltd. and was paid over $500,000 between July 2009 and December 2011, a salary that exceeded that of any other Mosquito executive. He rarely visited the CUMO project and after he repeatedly failed to meet deadlines relating to CUMO, tensions rose between Mr. Dykes and members of management and the Board. These tensions were exacerbated by the fact that Mr. Dykes appeared to be using Forsgren Associates as de facto project managers (more on Forsgren and John Moeller below). Ultimately, Mr. Dykes was dismissed from Mosquito and responded by encrypting and rendering unreadable all of the Company''s technical data that he had.

Mr. Dykes'' falling out would appear to be the factor that drove him to align himself with Mr. Fu. The Company only recently realized the extent to which Mr. Dykes may have been in over his head in his previous role as Mosquito''s Exploration Manager. In particular, the Company determined that Mr. Dykes was the source of the error that resulted in the Company''s resource calculations being off and the corresponding drop in Mosquito''s share price once that information was released.

The dissidents have since made the outlandish suggestion that Mosquito''s discovery and disclosure of the error is an elaborate conspiracy to discredit Mr. Dykes that was instigated by Mosquito management in conjunction with two leading independent engineering firms and the London Metals Exchange. These two firms and the LME have independently confirmed the correctness of Mosquito''s position.

Unfortunately, for Mr. Dykes this is not the first time that his name has been involved with significant technical errors and retractions. In addition to the error that resulted in Mosquito having to correct its disclosure, Mr. Dykes'' advice to a company called IEMR Resources Inc. (IEMR) has drawn the concern of the British Columbia Securities Commission (BCSC). As disclosed by IEMR in a May 15, 2012 press release, the BCSC expressed concerns with respect to the independence of the authorship of an IEMR 43-101 technical report, specifically that Mr. Dykes might not be independent in accordance with the standards set by securities regulators. As a result of the BCSC review, IEMR was forced to retract certain technical disclosures it had made on the grounds that they were non-compliant with sections of 43-101. Mr. Dykes was the Qualified Person who approved the non-compliant disclosures. IEMR was required to re-file the 43-101 report, acknowledging that its previous disclosure was incorrect as it contained the quantity and grade of a deposit that had not been categorized. Quantity and grade are at the core of a mining company''s valuation - this type of incorrect disclosure can have significant implications for shareholders.

Dissident nominee John Moeller''s relationship to Mosquito

Dissident nominee John Moeller is a principal at Forsgren Associates, a firm that, from March 2010 to December 2011, was paid $1,084,782 to assist with CUMO''s permitting process. Mr. Moeller acted as Forsgren''s lead for this work. In December of 2011, management replaced Forsgren and Moeller with a qualified employee who is paid $8,500 per month. As a result, the permitting process in general has been managed as well as or better than it was under Forsgren and shareholders are receiving far better value (given that Mr. Moeller''s billing rate was $210.00 per hour).

Joseph Baird''s history with Mosquito

Dissident nominee Joseph Baird served the Company as special counsel with regard to permitting and environmental legal issues associated with its CUMO project. Mr. Baird''s presence on the dissidents'' slate of nominee directors is, in the judgment of the management of the Company, a conflict of interest given his previous involvement with the Company.

As the dissidents'' Circular does not disclose a clear plan for advancing the CUMO project, Mosquito shareholders might reasonably question whether the willingness of Messrs. Moeller, Baird and Dykes to serve on the dissident Board is motivated simply by an interest in again securing lucrative consulting and advisory work from the Company. Their independence as directors, looking out for the interests of all shareholders must therefore be seriously called into question.

IEMR''s Performance

IEMR is a molybdenum exploration company controlled and led by the same group who are now trying to take control of Mosquito. IEMR''s troubling history should be of great interest to Mosquito shareholders. Mr. Fu is the President, Chief Executive Officer and a Director of IEMR, with Mr. Wang serving as a Director and Chief Financial Officer. Shaun Dykes serves as IEMR''s Qualified Person for the Pine Tree Project, its principal asset.

IEMR''s shares trade at $.03 (as at September 24, 2012). IEMR shares have lost approximately 90% of their value since IEMR went public in September of 2010 and have lost approximately 73% of their value in 2012 alone. According to its most recent MD&A, filed September 19, 2012, IEMR has not determined the existence of economically recoverable ore reserves, and additional financing will be required if the company is to continue its exploration activities.

IEMR was also cited in a September 2011 Reuters report as one example of several Sino-Canadian companies that have demonstrated irregularities in their disclosure. IEMR has also drawn the scrutiny of the BCSC for inappropriate technical disclosure and resource estimates.

These issues and poor performance have all been under the watch of Messrs. Fu, Dykes and Wang. Now Mr. Fu and his team want to take charge of Mosquito. This should be of concern to all Mosquito shareholders.

The Future for Mosquito and CUMO can be bright, but shareholders need to vote their GOLD proxy

Since the 2011 Annual Meeting, Mosquito''s management has moved decisively to further the interests of all shareholders. Mosquito has:

1. Met with over 50 investment brokerage firms and banks in the United States, Russia and the People''s Republic of China for the purposes of generating interest in the Company and potential operating capital financing;

1. Provided due diligence and on-site assessments to a major international mining company and a large steel company;

1. Discussed and negotiated strategic alliances and financings for the CUMO project which included a $30 million equity financing for the completion of the pre-feasibility study and a $100 million joint venture financing for the completion of a pre-feasibility and feasibility study (both of which are at a non-binding stage and the latter of which is still under discussion and being pursued by Management); and

1. Completed the sale of a non-core asset for $5 million, which allowed the advancement of the project while avoiding share dilution during depressed market conditions.

These tangible efforts continue and are well beyond the conceptual steps that the dissidents purport to have accomplished to date or say they intend. In fact, management''s discussions occurred despite repeated letters and threats from members of the dissident group in an attempt to scare off prospective investors. ISS noted the efforts that we are taking, saying that "there appear to be sufficient evidence that management has been dedicated on progressing the company''s flagship CUMO project [sic], which should be the real focal point at the current development stage of the company."

Vote FOR Mosquito''s director nominees on the GOLD

I believe in Mosquito and the potential of CUMO, a belief that is shared by the talented individuals who stand with me for election to the Mosquito Board. Mr. Fu also sees potential in the company. The difference is that with management''s slate of director nominees, all shareholders will benefit from the value that is created. The dissidents have offered vague and general promises about Mosquito''s future, and a plan that ISS called "light in details." I am confident that shareholders see through the dissidents'' attempts to distract shareholders from their true intentions by hurling insults and accusations at Mosquito.

In the final, rational analysis, the overwhelming evidence suggests that for the dissidents, this is really about Mr. Fu''s continued attempts to take control at a discount. This presents real risks to shareholder value. I respectfully urge you to carefully consider the history, actions and qualifications of Mr. Fu and the other dissident director nominees, and compare it to that of management''s slate of director nominees.

It is then imperative that shareholders vote only their GOLD proxy in support of management''s director nominees and ensure that it is received by no later than the proxy deposit deadline of Friday, October 12, 2012 at 2:00 p.m. (Vancouver time).

I thank you for your continued support.

Sincerely,

Brian A. McClay, President, CEO and Director

Voting Instructions

Your investment in Mosquito is at risk as a result of the dissidents'' conduct. It is therefore imperative that shareholders vote only their GOLD proxy in support of management''s director nominees and ensure that it is received by no later than the proxy deposit deadline of Friday, October 12, 2012 at 2:00 p.m. (Vancouver time).

For assistance in voting your Shares, please contact Mosquito''s Proxy Solicitation Agent, Georgeson at: 1-866-413-8828 or by email: askus@georgeson.com.

Special Meeting

The Special Meeting is scheduled for Tuesday, October 16, 2012 at the Vancouver Convention Centre, West Meeting Rooms 205-7, 1055 Canada Place, Vancouver, B.C. V6C 0C3 at the hour of 2:00 p.m. (Vancouver time).

About Mosquito Consolidated Gold Mines Limited

Mosquito Consolidated Gold Mines Limited is a mining exploration and development company with a diverse portfolio of high potential precious and base metals projects, located in low political-risk environments in North America. The Company''s primary focus is developing its Idaho-based CUMO project, one of the world''s largest molybdenum deposits with significant copper, silver and tungsten by-products. For more information about the company, please visit www.mosquitogold.com and www.CUMOproject.com.