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Tarnished Wawa gold company out to 'rebuild the trust' of shareholders

Red Pine Exploration takes no questions during webcall but still touts Wawa exploration project

Though Red Pine Exploration’s reputation has taken a severe hit, the Toronto gold company still believes in the untapped mineral potential of its Wawa Gold Project, said board chair Paul Martin.

In a May 15 webcall to shareholders, the Wawa gold explorer began the campaign to dig itself out of an emerging scandal involving published drill assay results that the company alleges were tampered with by former CEO Quentin Yarie.

Martin acknowledged there’s been “significant reputation damage,” reflected in a down-plunging share price down to $0.095 on May 17, down from $0.21 on April 30. But after diving into the details with an internal investigation, “the result is, in my opinion, more reputational than fundamentally impacting the mineralization of the property.

“Our job now is to rebuild the trust of the markets under new leadership.” 

Company management did not take questions from shareholders and analysts during the webcall.

The Wawa Gold Project is two kilometres south of the community of Wawa and not far from the township airport. The company’s 7,000-acre exploration property is in an area that was historically mined for gold going back to the 1800s. The company’s exploration program has been bankrolled by Alamos Gold in 2020 and Franco-Nevada in 2023.

So far, the company claims their in-house review, launched at the end of April, revealed that the assays were “selectively manipulated” by the former CEO over a long period of time but really ramped up during the 2015-16 and 2022-23 periods.

Martin said these changes “were done in a sophisticated, selective and isolated manner and disguised to make it look as if it was the manipulated assay certificates that were sent by the assay lab to the company.”

A Red Pine staffer stumbled upon these manipulations when looking to clarify a missing assay datapoint that required an updated certificate sent from ActLabs directly to the staff member.

That’s when larger questions began to be asked why actual, certified results sent from ActLabs didn’t match up with what was recorded in Red Pine’s assay database.

The investigation to dig into these inconsistencies revealed an email trail between ActLabs and Yarie, leading Red Pine to point the finger at the former CEO. Red Pine management has stated it stands behind the work of ActLabs.

In not initially knowing the extent of the damage, Red Pine’s board decided to retract all of the published drill assay results

“All of this work was completed in days, rather than weeks, with the team working extremely hard to get to the bottom of the issue,” said Martin.

He called this discovery by a staff member “coincidental” and “fateful” since Red Pine was set to release an updated mineral resource estimate by early summer.

In instances where the results were manipulated, the gold grades were increased. But what’s mystifying for company management is that they were already pulling “extremely strong” gold results from its exploration drill program. The assay results that were changed were made to make the grades look even higher.

“I scratch my head about all these changes, especially when the underlying assays were already strong,” said Martin.

The company still has the raw drill hole data to analyze and the plan is to press ahead immediately to prepare a new gold resource estimate for the Wawa project.

The Red Pine controversy is reminiscent of a similar incident from 2023 when Clean Air Metals had to pull its resource estimate and preliminary economic assessment after a miscalculation was made for its Thunder Bay North palladium and copper project.

Since the news broke earlier this month, Martin said he’s fielded many inquiries about Yarie’s unexpected departure in February and whether this was orchestrated and tied to this controversy.

“I will repeat here what I have said to all, that his departure was in no way associated with this matter as we had no knowledge of this until well after his departure.” 

The matter has been referred to the Ontario Securities Commission and, should the regulator decide to launch an investigation, Martin said they “will fully cooperate.” Legal options remain on the table, he said.

Red Pine has temporarily called a halt to its current drilling program and is in cash conservation mode until a new resource estimate in published.

The conference call made for an awkward entrance and introductory remarks for incoming CEO Michael Michaud, who starts in July.

“Never in my wildest dreams did I think my first address to Red Pine shareholders would be under these unfortunate circumstances.”

“This situation could have been a lot worse in terms of timing and impact on the project.”

Before accepting the job, Michaud said he did his homework and has faith in “the many positives of the property that attracted me remain intact.” 

He admits they have their work cut out for them.

“The main Surluga deposit has a good grade and a good size with excellent potential for expansion. Also, the deposit extends to surface, which may provide mining flexibility in the future with a potential starter pit, or large pit both, with potential underground operation commencing after the pit operation or during.”

There are a number of known and underexplored areas on the property where more ounces can be added to the resource base, he said.

Michaud preached patience to shareholders. 

“Please let us do the work and we will come back with positive results. Obviously, we have to make some changes at Red Pine to ensure this sort of thing never happens again. We will also look to optimize our exploration work going forward.

“After what’s happened, I don’t expect people to blindly trust me regarding the positive aspects of the property and its future; however, please give us the time to do the work and report back.”