Katanga Mining Limited (Nasdaq: KATFF)
The complaint charges Katanga Mining Limited (Nasdaq: KATFF) and certain of its current and former officers with violations of the Securities Exchange Act of 1934. Katanga, through its subsidiary Kamoto Copper Company SA, engages in copper and cobalt mining and related activities in the Democratic Republic of Congo.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Katanga’s business and financial results, including that Katanga was engaged in improper accounting practices and there were material weaknesses in Katanga’s internal control over financial reporting during the Class Period. As a result of defendants’ improper accounting and internal weaknesses, Katanga securities traded at artificially inflated prices during the Class Period.
Then on November 20, 2017, Katanga announced the restatement of certain of its financial statements. According to the Company, following the end of the second quarter of 2017, “information drawing into question the appropriateness of certain of the Company’s accounting practices came to the attention of the independent directors of the Company.”
As a result, an internal review was undertaken and the review “identified accounting practices that, among other things, incorrectly recorded the total tonnage of finished product inventories and incorrectly recorded the valuation of copper concentrate included in work in progress inventories, the valuation of ore in stockpile inventories and the amounts of property, plant and equipment during 2016, 2015 and prior periods, which practices were not appropriate and required adjustments.” The Company also stated that “the accounting practices that resulted in the restatements . . . demonstrated . . . material weaknesses in the Company’s internal control over financial reporting.” On this news, over the next three trading days, the price of Katanga shares fell $0.23 per share, or over 23%, to close at $0.75 per share on November 22, 2017.
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