An anonymous director reports

CRA AUDIT UPDATE

Mustang Minerals Corp. has provided an update on the Canada Revenue Agency audit of Canadian exploration expense renounced to subscribers of Mustang in prior flow-through share issuances.

The company has been notified by the CRA of its determination of the shortfalls for years 2010 to 2012 when CEE was renounced to subscribers (see Nov. 13, 2015, press release regarding the CRA audit). The shortfall for the three years of CEE totalled $1.37-million versus the $1.46-million preliminary amount announced Nov. 13, 2015. The reductions to the amount of CEE in each of the years are as follows: 2010 taxpayer identification No. 42090-1: 20.3-per-cent reduction; 2011 TIN 43326-8: 9.3-per-cent reduction; 2012 TIN 44284-8 16.7-per-cent reduction. Subscribers of the flow-through share issuances will be contacted directly by CRA regarding a reassessment in the coming weeks. In addition, CRA has notified the company that it is liable for Part XII.6 of $145,000 in connection with the shortfall.

As a potential measure to deal with the liability arising from the indemnification of shareholders pursuant to the subscription agreements, the shareholders of the company at the annual meeting held Feb. 3, 2016, approved the issuance of common shares of the company in order to satisfy obligations to subscribers of the flow-through share issuances of up to $600,000. The current working capital of the company is insufficient to repay the obligations relating to the audit.

Annual meeting

The reappointment of the current directors and the resolutions contained in the management information circular dated Dec. 23, 2015, were approved by shareholders at the annual meeting of the company held Feb. 3, 2016, in Toronto.

We seek Safe Harbor.