Photo by: Bloomberg
TORONTO (miningweekly.com) – Toronto- and Hong Kong-listed SouthGobi Resources late on Tuesday said it understood that it was the target of a proposed securities class action against the company, certain of its current and former senior officers and directors, and its former auditors in the Ontario Superior Court of Justice regarding its restatement of financial statements at the end of last year.
The company said it had become aware that Canadian law firm Siskinds LLP had filed a proposed securities class action on or around Monday, despite the company not having been formally served with a copy of the proposed claim.
SouthGobi announced that it had engaged independent legal counsel in Canada to advise it on this matter and that it intended to “vigorously” defend the lawsuit if, and when, it was served with the proposed claim.
The Mongolia-focused coal miner in November said it would restate its financial results from 2011 to 2013, owing to a change in the point of revenue recognition at its Ovoot Tolgoi mine.
The company, which is owned by global mining giant Rio Tinto through Turquoise Hill Resources, issued restated consolidated financial statements reflecting a change in the point of revenue recognition from delivering coal to the customer stockpiles within its flagship Ovoot Tolgoi mine’s stockyard, to the moment it is loaded onto the customer's trucks when it is collected.
The mine neighbours China, and mainly sells coal to customers in China.
Meanwhile, Turquoise Hill last month reported that a class action complaint was filed in the US District Court for the Southern District of New York alleging violations of the federal securities laws by Turquoise Hill and certain of its officers and/or directors arising out of the company's restatement resulting from the revisions to the revenue recognition protocol by SouthGobi.
The company, at the time, said it believed the complaint was without merit and vowed to vigorously defend against it.
SouthGobi’s TSX-listed stocks traded up 1.19%, or C$0.01 a share, at C$0.85 on Wednesday morning.