CALGARY, Oct. 9 /CNW/ - In May 2006, the Alberta Securities Commission
issued a cease-trading order on Flag's shares, for late filing of the 2005
annual financial statements, rejecting Flag's auditor's request for a one
month extension to file the financial statement. The Commission had no
comments on Flag's financial statements.
In December 2006, Flag applied to have the cease-trading order rescinded,
as its financial statements were up to date. Instead of processing the
application, the Commission proceeded to change the conditions under which the
cease-trading order was issued by commencing a series of spurious allegations
up to the present on Flag's financial reports for 2003, 2004 and 2005 with
which Flag would have to deal before the cease-trading order would be revoked.
The main allegation that Flag's auditor had not prepared the financial
statements in accordance with Generally Accepted Accounting Principles is
simply not true.
Flag's Auditor's Report (as in every Lo Porter Hetu audited financial
To the shareholders of
SOURCES (1985) LIMITED
We have audited the balance sheets of Flag Resources (1985) Limited as at
December 31, 2003 and 2002 and the statements of operations and deficit and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Canadian generally accepted
auditing standards. Those standards required that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
In our opinion, these financial statements present fairly, in all
material respect, the financial position of the Company as at December 31,
2003 and 2002 and the results of its operations and cash flows for the years
then ended in accordance with Canadian generally accepted accounting
Lo Porter Hetu
Certified General Accountants
Lo Porter Hetu is associated with Porter Hetu, an International
Professional Service Group.
The 2003 to 2005 annual financials were accepted by Flag's share holders
and the investment community. These financial statements were filed with the
Commission, with no critical comments from the Commission at the time of
filing. The cease-trading order continues and is a very serious detriment to
As reported in press releases, with new technology enabling airborne
surveys to penetrate to depths of 2600 feet, Flag accepted recommendations to
complete airborne surveys over its holdings in Rathbun and Mackelcan
Townships. Initial funding of $115,000 was provided by Flag's chairman Sid
Misczcuk age 80 and president Murdo McLeod age 81.
In Rathbun Township:
The airborne surveys outlined more mineral prospects than had been found
in 28 years of exploration by Flag including: in Rathbun Township, the
discovery of mineralized quartz diorite over a large area, with quartz diorite
associated with major ore deposits in the adjoining Sudbury igneous complex; a
large magnetic anomaly in Rathbun Township recommended for drilling;
coinciding Magnetic and Electro Magnetic anomalies recommended for drilling;
prime study recommended for the study of changes in the Rathbun Lake Magnetic
Anomaly as it passes under a gabbro-sediment contact and intersects a mined
out surface of rich massive sulfides (selected sample, 10% copper, 34 ounces
palladium); discovery of EM anomalies at the north end of Rathbun Lake and in
the peninsula at the South end of Rathbun Lake.
In Mackelcan Township:
Five varieties of nickel-bearing sulfides, confirmed by 2001-2003 study
to be in mineralization in quartz veins at Cobolt Hill, suggested to have
originated in a nearby mineralized mafic or ultramafic intrusion. A downhole
magnetic survey outlined such a very strong magnetic mafic or ultramafic
intrusion nearby, from 450 to 2200 feet in depth;
- Airborne EM surveys are recommended for two large magnetic anomalies,
one underlying and to the northwest of Wolf Lake and the other on the east
side of the Laundry Lake fault located east of Wolf Lake.
After 28 years of waiting, the exploration and development of these newly
discovered mineral prospects could bring substantial financial benefits to
Flag shareholders. However, the continuing cease-trade order on Flag's shares
has seriously impeded the commencement of any large exploration program on the
For the past three years, the Alberta Securities Commission and TSX
Venture Exchange have endeavored to force the resignations of Flag's chairman
and Flag's president. In contrast, their re-election as directors of Flag was
approved by 94.93 percent of the proxy votes by shareholders at Flag's annual
shareholders meeting, on October 7, 2008. Flag's chairman and president are
bewildered by the actions of the Exchange and Commission as they are unaware
of any corporate malfeasance.
Flag's directors believe the investing public and its shareholders
deserve better from the Alberta Securities Commission.
For further information:
For further information: Murdo C. McLeod, President, Phone: (403)
262-8883, or toll free in North America: 1-888-531-7798, Fax: (403) 262-8886