More fake facts following Davidson & Company audit

Even after a likely intervention of the Canadian public accounting firm regulator, the mining company Metalex keeps misleading about its licences on occupied land in reports audited by Davidson & Company.

09 September 2022

The map above is a screenshot from Metalex' website.

A new financial statement by the Canadian mining company Metalex contains grave errors around one of its licences. The report claims that one of its assets is located “in Southern Morocco”. This is false. The company has no licence in Morocco. What the company does have is a licence in Western Sahara, which Morocco illegally occupies. 

The erroneous Metalex report comes in spite of the auditing company Davidson & Company having been informed about the errors, and the probable intervention of the Canadian audit regulatory body. The new financial report is dated 30 April 2022 and was published on 25 August. 

WSRW wrote to Davidson & Company on 13 May 2021, 13 July 2021 and again on 12 December 2021 regarding the Metalex misinformation. “Western Sahara Resource Watch wishes to alert Davidson & Company that Metalex does not have any assets in Morocco”, the letter reads. WSRW asked the auditing company whether it was aware of the erroneous information in the Metalex reports, and if the auditing company would make sure the misstatements be corrected in future reports. 

As the auditing company failed to reply to the correspondence, WSRW on 17 April 2022 wrote to the Canadian Public Accountability Board (CPAB) - Canada's independent, public accounting firm regulator - asking it “to review and take corrective action in relation to the material mis-statements made in the Davidson & Company LLP audited reports.” CPAB confirmed to WSRW on 30 April 2022 that it had initiated an internal process on the matter. 

The newly published financial report from Metalex makes reference to “a notice” it had received about the issue of Western Sahara, but that the company’s position “is that the territory is under the jurisdiction of the Kingdom of Morocco”. This is the first time ever that Metalex mentions “Western Sahara” in its reports, since it signed its first licence in 2004.

However, the company still refers to the licence as being in “Morocco” and “Southern Morocco”. This is both factually incorrect. The misinformation on the company's website also remains unchanged. 

"The reporting is gravely erroneous. Metalex is - knowingly - misleading the public about a grotesque operation it is undertaking on occupied land. It is remarkable that an auditing company vouches for this. Would Davidson & Company allow for auditing of financial reports that claim mineral exploration agreements with the Russian government for a place under ‘Russian jurisdiction’ in Donetsk? And would it then accept its client to refer in its financial statements to the location as being in Russia? As an auditing company, Davidson & Company is not only assisting Metalex and Morocco in an act of plunder, but is also not lifting a finger on the matter of misleading third parties about the real risks involved - even after having been alerted about such misstatements", stated WSRW in an email to Davidson & Company today. 

While Morocco has no sovereignty or administering mandate over Western Sahara, the Moroccan government bans all Saharawi work on self-determination. Numerous decisions from the UN Human Rights Council underline the systematic attacks against human rights defenders and journalists in the territory. Western Sahara scores lowest in the world on rankings of political freedoms.  

Metalex is currently pursuing an extension of its current mining licence that it has with a Moroccan government body for an area over which the latter has no jurisdiction: occupied Western Sahara. 

The Davidson & Company audit report accompanying the financial statement notes importantly that Metalex “is not generating operating cash flows and will require additional funding in order to maintain its activities for the coming year. These matters and conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.”

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