Wrap Text
Cautionary Ann, Resig of Auditors, Withdrawal of Audit Report & Associated Dispute on Deferred Taxation & AGM
MANTENGU LIMITED
(formerly Mantengu Mining Limited)
Incorporated in the Republic of South Africa
(Registration number 1987/004821/06)
Share code: MTU ISIN: ZAE000320347
(“Mantengu” or “the Company”)
CAUTIONARY ANNOUNCEMENT – RESIGNATION OF AUDITOR, WITHDRAWAL OF AUDIT REPORT AND
ASSOCIATED DISPUTE ON DEFERRED TAXATION ASSET AND ANNUAL GENERAL MEETING (“AGM”)
Shareholders are advised that on the afternoon of Friday, 21 August 2026, the Company’s auditor
HLB CMA South Africa Incorporated (“HLB”) sent a letter to the Company advising, that a subsequent
quality review of their audit files post sign off of their audit opinion led them to assert that the
Company had not correctly accounted for deferred tax assets and liabilities as it had not separately
calculated each company’s position in the group results and that the deferred taxation asset was
materially overstated (“Reassessment”).
Based on HLB’s Reassessment, the deferred tax asset recognised at Group level was overstated by
approximately R58.3 million because, in their view, the individual statutory entities in the group would
not generate sufficient taxable profits in the future against which the deferred tax assets could be
realised.
HLB’s view was that this issue was material to the Group's financial statements and had the matter
been correctly identified by them in terms of the relevant accounting standards and appropriately
dealt with in their audit report, before it was issued, a modified audit opinion would have been
required. As a result, the previously issued financial statements are materially misstated and the audit
opinion issued thereon by them at the time was incorrect.
The Board met on Monday, 24 August 2026 at 2 pm, and considered the letter in full and reviewed
the composition of the deferred tax calculations provided to HLB during the course of the audit for
the year ended 28 February 2026. This review confirmed that the group had in fact separately
calculated the tax position of each statutory entity and not done a group assessment as HLB alleges.
The Board also discussed in detail the probability that each statutory entity will generate sufficient
taxable income in future to realise the deferred tax assets and reaffirmed in this meeting the view
that it held at the time of preparing the group consolidated annual financial statements for the year
ended 28 February 2026.
The Board responded in writing to HLB on Tuesday morning, 25 August 2026 at 6 am disagreeing with
their view in respect of their Reassessment. The Board advised HLB that they had been provided with
a detailed tax calculation for each statutory entity during the audit of the February 2026 results. The
Board urged HLB to refer back to this detailed calculation in their possession and reconsider their
position. The Board also questioned HLB in its response as to how they, without any new information
being provided to them, could change their position on deferred tax, months after issuing their audit
opinion.
On Wednesday, 26 August 2026, HLB continued disagreeing with the Company and issued the
Company three letters, namely:
• A letter stating that the audit report on the annual financial statements has been withdrawn due
to the differing opinion on the recoverability of the deferred tax assets.
• A letter stating that a Reportable Irregularity has been reported around the Company’s refusal
to agree to amend the financial statements as set out above, and its intention to present those
financial statements, which HLB considered to be incorrect and misleading in their respects set
out above, at the Annual General Meeting.
• A letter stating that HLB have resigned with immediate effect but have offered to co-operate
with the incoming audit firm.
The Board’s views as a result of the events that unfolded on 26 August 2026 are as follows:
• The only issue at hand here is a differing view on future profitability of the statutory entities within
the group.
• The Board stands by its view that sufficient future taxable profits will be generated by each
statutory entity withing the group against which deferred tax assets will be realised. This is the
view it held at the time of preparing the consolidated group annual financial statements for the
year ended 28 February 2026.
• The Board would have expected HLB to issue a revised audit opinion that included an extra
qualification in respect of recoverability of the recognised deferred tax asset rather than
withdrawing their audit opinion. The CEO tried calling the audit partner to discuss this approach
but the calls were not accepted nor returned.
• Withdrawing an audit opinion because of a differing view on future profitability of the statutory
entities within the group is not appropriate. This issue does not impact other line items in the
financial statements such as Property, Plant and Equipment, Revenue etc. The only impact of a
write off in respect of the deferred tax asset would be a corresponding increase in the net loss
as a result of increasing the tax expense. To paint the entire financial statements as unreliable by
withdrawing their audit opinion beggars belief.
• A differing view on future profitability of the statutory entities within the group and resultant
recognition of a deferred tax asset does not meet the definition of a reportable irregularity. The
Board intends to seek legal opinion on this and take any steps it deems necessary to protect its
reputation.
AGM
The AGM is scheduled for 14h00 today. Shareholders will be fully informed as to the withdrawal of
the audit opinion. HLB advised that the retraction related to the audit opinion and did not, and
cannot, of itself amend the 2026 AFS, which remain the responsibility of the Board.
Cautionary announcement
As a result of the withdrawal of the audit opinion and resignation of HLB, shareholders will need to
exercise caution. The Board will seek legal advice on next steps in respect of HLB’s withdrawal of
audit opinion as well as engaging the JSE before taking any such steps. In the meantime, the Board
will begin the process of appointing a new auditor. The Company will update shareholders on any
developments on a timely basis.
By Order of the Board
27 August 2026
Designated Advisor
AcaciaCap Advisors Proprietary Limited
Date: 27/08/2026 12:20:00
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