TORONTO, June 12, 2019 /CNW/ - Orefinders Resources Inc.
("Orefinders" or the "Company") (TSX.V: ORX) discloses that, during
the course of its due diligence on Mistango River Resources
("Mistango") (MIS:CSE), it has identified concerning and
unexplained issues related to Mistango's finances and its 2018
Audited Financial Statements including what may be a conflict of
interest between Mistango's CFO, Carina Da
Mota, and its independent auditor Kreston GTA LLP ('Kreston
GTA').
Orefinders concerns are rooted in the following circumstances:
On April 29, 2019, one day prior to
the filing deadline for Mistango's audited Annual Financial
Statements, Mistango filed on SEDAR a notice of resignation dated
April 17, 2019 of its long-standing
auditor, Palmer Reed, and the
appointment of Kreston GTA as its new auditor. One day later, on
April 30, 2019 Mistango released its
2018 Annual Financial Statements and accompanying MD&A signed
off by Kreston GTA.
The potential conflict of interest arises from Mistango's CFO,
Ms. Da Mota, simultaneously being employed by accounting firm
Parker Simone LLP ('Parker Simone') as its Managing Director, while
both Parker Simone and Kreston GTA
are member firms of Kreston International Limited's network.
Orefinders raised this issue with Mistango's Board of Directors,
Ms. Da Mota and Kreston GTA in a letter on May 6, 2019 and in subsequent enquiries, but has
yet to receive any explanation. Orefinders is questioning how these
interconnected relationships can provide Mistango's shareholders an
independent and external audit. Should Mistango continue to deny
any explanation, Orefinders would expect the appropriate securities
regulators and professional organizations to begin an
investigation.
CPA Ontario's Code of
Professional Conduct Section 204.4 states, 'Serving as an
officer or director of a reporting issuer or listed entity audit
client. A member or firm shall not perform an audit
engagement for a reporting issuer or listed entity if a member or
an employee of the firm or of a network firm serves as an officer
or a director of the reporting issuer or listed entity or a related
entity.'
Given the questionable interconnected relationships between
Mistango and its Auditor, along with the hurried timeframe with
which the audit was conducted, Orefinders demands that Mistango
appoint a new, independent and arms length accounting firm for a
thorough review of Mistango's finances, which could involve the
need for a new independent audit of Mistango's 2018 fiscal year.
Furthermore, Orefinders believes Mistango's shareholders require an
appropriate clarification on this potential conflict prior to
Mistango issuing any securities or agreeing to any material
transactions. Orefinders cannot attest to the lawfulness of any
conflict of interest and only that it deems circumstances to be
unusual and had requested an explanation over a month ago from
Mistango.
In addition to the above, Orefinders is concerned with the
timeframe under which Mistango's audit by Kreston GTA was
completed. Orefinders calls into question the accuracy or
thoroughness of a new client audit being completed in less than two
weeks. It would be natural to assume that a fair and comprehensive
review of a new client not be reasonable within such a tight
timeframe. As an example and as cited in Orefinders' news release
on June 5, 2019, Mistango has not
held a shareholder meeting since June 29,
2017. Mistango failed to hold its annual shareholders'
meeting ("AGM") in 2018, and, in filings with Corporations Canada,
Mistango misled the public and regulatory authorities by falsely
stating that it held the AGM on June 19,
2018. The discovery of this fact is easily verifiable on
SEDAR yet seemly went unknown and was not disclosed in Kreston
GTA's audit. Furthermore, there is a representation in the 2018
MD&A, which states that shareholder information expenses
increased in 2018 "due to higher investor relations services in the
year relating to the Company's annual general meeting". Given no
shareholder meeting had taken place in 2018, Orefinders questions
whether other misrepresentations also exist in the 2018 Annual
Filings.
Mistango's Audit Committee
Oversight of the audit process rests with Mistango's audit
committee. Orefinders has been unable to verify the precise
composition of Mistango's audit committee given that Mistango has
not filed a Management Information Circular in respect of its 2017
or 2018 financial years; however, recent filings do indicate Mr.
Michael Demers as the Audit
Committee Chair and non-recent filings also list COO Donald Kasner as a member of the audit
committee. There is no information available as to who Mistango's
second independent audit committee member is. Given Mistango only
has two independent directors and this is the minimum requirement
under the Canada Business Corporations Act, it is reasonable
to assume Mr. Ilian Iliev is also a
member. Given the concerns detailed above, this warrants a review
of the qualifications for each of Mistango's audit committee
members and their qualifications as being financially literate for
the purpose of serving as part of an Audit Committee.
The Ontario Securities Commission has published a guideline for
Audit Committees, defining Financial Literacy as an individual that
has the "ability to read and understand a set of financial
statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and
complexity of the issues that can reasonably be expected to be
raised by the issuer's financial statements." Orefinders questions
the qualifications of the current members of the Audit Committee,
including any education leading to a degree or credentials in a
finance or accounting-related role. Note that Mr. Demers, the
Chairman of the Audit Committee, holds a Bachelor of Arts in
Geography, Donald Kasner's education
has not been disclosed, and Ilian
Iliev has a Master of Science in Geology.
About Orefinders Resources Inc.
Orefinders is a Gold exploration and development company focused
exclusively within the Abitibi Greenstone Belt. The Company is
listed on the TSX Venture Exchange under the symbol ORX.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in
the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this
release. Certain information in this press release may contain
forward-looking statements. This information is based on current
expectations that are subject to significant risks and
uncertainties that are difficult to predict. Actual results might
differ materially from results suggested in any forward-looking
statements. Orefinders' assumes no obligation to update the
forward-looking statements, or to update the reasons why actual
results could differ from those reflected in the forward
looking-statements unless and until required by securities laws
applicable to Orefinders. Additional information identifying risks
and uncertainties is contained in filings by Orefinders with
Canadian securities regulators, which filings are available under
Orefinders' profile at www.sedar.com.
SOURCE Orefinders Resources Inc.