TORONTO, June 24, 2019 /CNW/ - Orefinders Resources Inc.
("Orefinders" or the "Company") (TSX.V: ORX) is disappointed to
announce that Mistango River Resources Inc. ("Mistango") (MIS:CSE)
has rejected Orefinders' offer to arrange an arms length financing
to be done at a premium to the Canadian Stock Exchange's minimum
share issuance price of $0.05. In
turn Mistango announced on June 20,
2019 that it is completing a discounted flow-through share
issuance at $0.022 per share. This
$0.022 per share financing amounts to
a minimum of a 56% discount in share price to what Orefinders had
offered in its June 18, 2019 news
release. Furthermore, Mistango is issuing 15,909,090 shares from
its 38,073,481 shares outstanding which amounts to 41% dilution to
existing shareholders.
Mistango's financing is a flow through share offering, meaning
that the true cost to the investor, depending on their tax bracket,
could be in the 1 cent range. Perhaps
most concerning is the inclusion of the sale of a 3% NSR on all
Mistango's assets, including Mistango's only asset of substance,
the Omega Project. Given Mistango's financing transaction was a
combined share issuance and royalty sale, Orefinders questions the
assigned value of $150,000 for these
royalties. Orefinders believes these royalties are worth
substantially more which would imply an even further discount the
true value of the per share price issuance.
Why is Orefinders concerned about these entrenchment
tactics?
Mistango's management and Board of Directors have demonstrated a
pattern of liquidating assets, which belong to the company's
shareholders, in order to fund management salaries, office rent
paid directly to the CEO Robert
Kasner and exploration and travel expenses above and beyond
the salary of his son, COO Donald
Kasner. Additionally, we note Donald
Kasner recently took out a $11,582 loan from Mistango.
Orefinders also notes the following Mistango Asset Sales in
since 2013:
- 2013: Sale of HM Royalty for $1,250,000 and 100,000 common shares of Premier
Royalty Inc.
- 2015: Sale of 14,500 Sandstorm Gold shares for $46,372
- 2016: Sale of Estrades property for $700,000
- 2018: Sale of Surface Rights on one of its properties for
$35,078
- 2019 Q1: Sale of 1% NSR from Estrades transaction for
$75,000
- 2019 Q2: Sale of 3% royalty on all properties for $150,000
Where has the $2,256,450 in
proceeds from these asset sales gone? As of March 31, 2019, Mistango's most recent
financials, the company had $8,245 in
cash and a working capital deficiency.
During this same time period of asset liquidation since 2013,
Mistango has not released a single exploration or drill result
since July 2013.
Despite this, Mistango management and insiders have been well
compensated since 2013:
- $1,748,714 in management
compensation paid to insiders;
- $1,594,853 in exploration
expenses, of which unspecified amounts are attributed to related
party transactions or "certain corporate entities and consultants
that are RELATED to the Company's officers and directors"
- $137,805 in office rent
paid to a company controlled by Mistango's President and CEO.
No Shareholder Approval, No Annual General Meeting for 2
Years
This 56% discounted financing, which sees existing Mistango
shareholders diluted by 41%, in combination with an asset
encumbering 3% royalty sale was completed by Mistango's board of
directors and management without receiving any shareholder
approval. Furthermore, as stated in multiple news releases,
Mistango has not held an annual shareholders meeting, as required
by law, in 2018 or 2019. As per Mistango's filings, only a
single person on its board and management team is a shareholder of
Mistango.
Mistango has mislead its investors as well as governing
authorities stating that it has held a Shareholder Meeting in
2018. To clarify, Mistango DID NOT hold any Shareholder
Meeting in 2018. And Mistango did not call a Shareholder Meeting
for 2019 until Orefinders requisitioned one. Mistango has not
held a Shareholder Meeting since 2017. As per the Canada
Business Corporations Act, annual shareholder meetings are required
within 6 months of a company's year end. Mistango's year end is
December 31, and therefore it's
required to call a shareholder meeting before June 30, 2019, with the deadline this year
approaching in 4 days (Friday, June
28), compliance for this year's meeting is impossible.
Orefinders also notes that Mistango failed to hold a shareholder
meeting in 2016 which further shows a pattern of shareholders
disregard and poor corporate governance.
We encourage Mistango shareholders and governing authorities
whose responsibility it is to govern fair practices within
Canada capital markets to evaluate
these facts and draw their own conclusions. All the information
cited above was sourced from Mistango's public
filings.
We also encourage all Mistango shareholders and governing
authorities to ask why Mistango's board of directors chose not to
pursue Orefinders' arms length financing proposal to be done at a
significant premium and without encumbering its assets with
royalties. Furthermore, why despite Mistango's statement that its
extremely dilutive financing's use of proceeds "to fund development
of its flagship Omega Project and for further exploration" is
contrary to Mistango's monthly filings with the Canadian Securities
Exchange (most recently, May 2019
Monthly Progress Report filed on June 4,
2019), where Mistango has consistently indicated that they
continue "to defer exploration on all its properties until market
conditions improve."
Legal Action
Orefinders will continue to fight for the rights of the
shareholders who have been ignored by current Mistango's current
leadership. Orefinders holds the strong opinion that the
independent authorities who regulate fairness and improper
practices on Canada's capital
markets must independently intervene on what it sees egregious
abuses of shareholder rights. Failing this, Orefinders reserves the
right to pursue any and all appropriate legal steps to reverse both
this dilutive and discounted share issuance of Mistango, along with
the encumbering royalty issued to the same party.
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 Toronto
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.