Red Pine Says Former CEO Manipulated Over 500 Wawa Gold Assays

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Following the discovery of assay result inconsistencies at its Wawa gold project, Red Pine Exploration (TSXV:RPX,OTCQB:RDEXF) disclosed on May 10 that 532 out of approximately 98,000 assay results in its database appear to have been manipulated since it took ownership of the asset in 2014.

An internal investigation has revealed that the assay result inconsistencies were caused by the actions of the company’s former CEO, Quentin Yarie. The discrepancies were first reported by Red Pine on May 1.

Yarie is alleged to have manipulated certain assay results received from Activation Laboratories, subsequently disseminating them for various purposes, including resource modeling and public disclosure.

The Wawa gold project, which is situated in Northern Ontario and is the company’s flagship operation, covers over 7,000 hectares and is home to several past-producing mines with historic production of 120,000 ounces of gold.

The company’s share price plunged on May 1, dropping to C$0.08 from the previous day’s close of C$0.21. While it saw a slight recovery over the next two weeks, rising as high as C$0.12, it sank again on May 10 to C$0.09.

Red Pine Exploration stock chart, April 15 to May 13.

Chart via Google Finance.

According to Red Pine, assay result mismatches occurred during two periods: 2014 to 2019 and 2019 to 2024.

In the 2014 to 2019 period, both the Surluga and Minto deposits at Wawa were affected.

The company’s May 10 release notes that while no material losses are anticipated from Surluga’s indicated resource, it estimates a reduction of 39,500 to 54,000 ounces from its inferred resource.

In terms of Minto, Red Pine said it estimates a loss of 8,000 to 12,000 ounces from its indicated resource and a decrease of 16,000 to 20,000 ounces in its inferred resource. The company has emphasized that these numbers are its own internal estimates and have not been verified by an independent qualified person.

Investigations into the 2019 to 2024 period are ongoing, although Red Pine said it hopes to provide an update in a press release before the market opens on Wednesday (May 15). A conference call is planned for that day at 10:00 a.m. EDT.

WSP Global, a consulting and engineering firm, has been appointed by the company to oversee an independent verification of all assay certificates from 2014 to the present. Red Pine has also informed the Ontario Securities Commission about the issue, and is looking into possible legal remedies moving forward.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

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