SouthGobi Resources Ltd. (
TSX: T.SGQ,
Stock Forum) says it understands that on or around January 6, 2014, Canadian law firm Siskinds LLP filed a proposed securities class action against the company, certain of its current and former senior officers and directors, and its former auditors.
The proposed class action, which was filed in the Ontario Superior Court of Justice in relation to the company’s restatement of financial statements, as disclosed on November 8, 2013, November 11, 2013 and November 14, 2013 and December 12, 1013.
The company has not been formally served with a copy of the proposed claim,
it said in a press release.
SouthGobi is a 56%-owned subsidiary of
Turquoise Hill Resources Ltd. (
TSX: T.TRQ,
Stock Forum), which took management control of SouthGobi in September, 2012 and made changes to the board and senior management.
The company is focused on exploration and development of metallurgical and thermal coal deposits in Mongolia's South Gobi region. It has 100% stake in SouthGobi Sands LLC, the Mongolian registered company that holds the mining and exploration licenses in Mongolia and operates the flagship Ovoot Tolgoi coal mine.
Ovoot Tolgoi produces and sells coal to customers in China.
The company has engaged independent legal counsel in Canada to advise it on this matter and intends to vigorously defend the lawsuit if and when it is served in the proposed claim.
SouthGobi shares rose 1.2% to 86 cents Tuesday, leaving the company with a market cap of $161.1 million, based on 187.3 million shares outstanding. The 52-week range is $2.71 and 75 cents.
At current levels, the stock is down from around $2.60 in January, 2013.