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Red Pine plans new resource, downplays alleged assay fraud at Ontario gold project PROBE
BY COLIN MCCLELLLAND
R
ed Pine Exploration (TSXV: RPX, US-OTC: RDEXF) says its ex-CEO did more reputational damage than harm to the company’s Wawa gold project in northern Ontario when he allegedly altered hundreds of drill core assays used in a resource estimate. Quentin Yarie, the CEO from July 2015 before stepping down on Feb. 21 this year in an unrelated move, according to the company, oversaw a data collection process where he was the sole recipient of emailed assay results from Activation Labs. Red Pine alleges Yarie changed 532 assays out of 98,000 before forwarding them to staff for use in project modelling its 2019 resource update and marketing. “Look, in the end, it could have been a lot worse in terms of timing and the impact,” incoming CEO Michael Michaud said on a conference call on May 19. “We still believe in the potential of the asset. This is the reason why I joined Red Pine, this is the reason why I’m here today and am looking forward to becoming the CEO.”
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“We still believe in the potential of the asset. This is the reason why I joined Red Pine, this is the reason why I’m here today and am looking forward to becoming the CEO.” MICHAEL MICHAUD, INCOMING CEO, RED PINE EXPLORATION
The scandal for the junior, which lost 60% of its share price when assay discrepancies were first revealed on May 1, may bring to mind the Bre-X Minerals fraud of the 1990s, but it’s on a much lower scale. Red Pine estimates the doctored assays aimed to marginally increase grade and could lower its Wawa project
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The core shack at Red Pine’s Wawa gold project in Ontario. RED PINE EXPLORATION
resource by as much as 12%. Bre-X involved blatant salting of core samples with incompatible gold nuggets that drove the company’s market value to $6 billion. “Certainly, though there was some manipulation of the assets, they were mostly embellishments,” Michaud said. “I’m not really terribly upset about the 10 or 15% because we’ll get that back easy.” New resource Red Pine suspended planned drilling and said it would trim costs at the site as it prepares to issue a new resource update with completely verified assays from as much as 70,000 metres in drilling since the last update. It didn’t give a potential completion date. “Sending the original assay certificates only to one recipient (the former CEO) and not to the qualified person who signs the press releases and controls the database was a clear lapse in judgment,” Joe Mazumdar, a geologist who publishes the Exploration Insights newsletter from Vancouver, wrote in a posting. “Red Pine management has since taken corrective actions, but it will take time to regain investor trust.” Shares in Red Pine were at 9¢ apiece in Toronto at press time, valuing the company at $16.3 million. They plunged to 8¢ apiece
from 21¢ on May 1 when the company first described the assay inconsistencies in a release. They had traded in a range of 16¢ to 24¢ this year until May. Red Pine referred the alleged fraud to the Ontario Securities Commission. A spokesperson for the commission said it wouldn’t comment as a matter of policy. The explorer didn’t mention any legal action of its own against Yarie. He hasn’t didn’t replyied to a request for comment from The Northern Miner. The commission didn’t reply to a phone message and email seeking comment at press time. The project lies beside the town of Wawa and near the northeast shore of Lake Superior, about 220 km north of Sault Ste. Marie. The site hosts several historical mines that produced about 120,000 oz. gold. Red Pine acquired the project in 2014. It produced a resource for the Surluga deposit in 2015 and later merged that report with one on a historical mine area, Minto, in 2018. New CEO The company on April 22 announced the appointment of Michaud as CEO. He is to take office around July 19. The leadership change had nothing to do with the alleged assay manipulation, chair-
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man and interim CEO Paul Martin (not the former Prime Minister) repeated on the conference call. “In all cases, the manipulation that occurred was to increase the grade,” Martin said. “However, in virtually all cases, the manipulated grades were defendable at the time, based on among other things, the visual inspection of the core and assessment of the mineralogy, and one reason why the selective manipulations were not easily brought to light at the time. “The changes were supported by the nuggety effect of the property as represented in the overwhelming number of unmanipulated assay results, often near where the selective manipulations were done.” Red Pine staff first noticed a discrepancy between a certified assay result received from Activation Labs and the corresponding assay result contained in the company’s database on April 29. An investigation determined the assay altering was done from the spring of 2015 until Jan. 30 this year. TNM PM44082538