Katanga Mining (TSX:KAT)
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1 Year : From Oct 2018 to Oct 2019
ZUG, Switzerland, Dec. 18, 2018 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") today announced that the Ontario Securities Commission (the "Commission") has approved a global settlement agreement between Staff of the Commission and the Company, certain of its former directors and officers and its Chief Executive Officer relating to the previously disclosed investigation by Staff into certain of the Company's historical disclosures.
In the settlement, the Company agrees that it (i) misstated its financial position and the results of its operations; (ii) failed to maintain adequate disclosure controls and procedures and internal controls over financial reporting; and (iii) failed to disclose material weaknesses in its internal controls. The settlement agreement also states that certain of its former directors and officers and its Chief Executive Officer authorized, permitted or acquiesced in such non-compliance with Ontario securities laws by Katanga and acted in a manner contrary to the public interest in their roles as directors and officers of Katanga.
Separately, the Company (and not its directors and officers) agrees in the settlement agreement that the Company failed to adequately describe the heightened risks associated with: (i) its operating environment, specifically the elevated risk of public sector corruption in the Democratic Republic of the Congo; and (ii) its reliance on individuals and entities associated with Dan Gertler, including the risk that a cessation or deterioration in Katanga's business relationships with such individuals and entities could have an adverse impact on Katanga's business.
Under the terms of the settlement, Katanga will make a voluntary payment in the amount of C$28,500,000 and reimburse Commission costs in the amount of C$1,500,000 and submit to a review by an independent consultant of its metal accounting with respect to reporting of production and its financial accounting with respect to the integration of production statistics. The Company's Chief Executive Officer, Johnny Blizzard, who has served in such role since February 2015,will resign as a director and officer of the Company, subject to a short transition period until his replacement is appointed. Full details of the settlement, including the settlement agreement, will be available on the OSC website: www.osc.gov.on.ca.
Following the completion of the Company's previously announced internal review by its independent directors and resulting restatement of its financial statements in November 2017, the board of directors and management of the Company have been working diligently to implement and test remediation measures to strengthen the Company's corporate governance, compliance and control processes. Following the internal review, the composition of its Board of Directors was changed to include three new directors, including two directors with significant finance and accounting expertise. In addition, as previously disclosed in the Company's management's discussion and analysis for the third quarter of 2018, the Company has restructured certain of its corporate governance reporting structures to reflect recommendations made by the advisors to the independent directors in connection with the review; implemented a new metal accounting system; conducted an independent review of the control environment relating to the newly implemented metal accounting system; enhanced training for management and directors, including securities and corporate law training for new directors and management and ongoing periodic training for all directors and senior management; and completed an assessment of significant accounts and business processes to identify associated risks and related controls. The Company also intends to enter into a management agreement in early 2019 with its majority shareholder, Glencore International AG. Katanga believes that the management agreement will allow operations to be managed more effectively and enhance the implementation of appropriate governance and controls.
Hugh Stoyell, Chairman of the Board of Directors, stated "This settlement enables the Company to continue to move forward with improved governance, compliance and control procedures and to focus on the completion of operational enhancements to its 75% owned copper and cobalt mine in the DRC with enhanced value for all our stakeholders. The Company takes full responsibility for failing to meet its disclosure obligations and to maintain effective internal controls as described in the settlement agreement. We believe the actions taken by Katanga's board of directors and management since the conclusion of the Company's internal review and restatement of certain financial statements in November 2017 have helped strengthen the Company."
Katanga will not be making any further statements on this matter. All dollar amounts referred to in this press release are in Canadian dollars.
About Katanga Mining Limited
Katanga Mining Limited operates a major mine complex in the Democratic Republic of Congo producing refined copper and cobalt. The Company has the potential to become Africa's largest copper producer and the world's largest cobalt producer. Katanga is listed on the Toronto Stock Exchange under the symbol KAT.
Forward Looking Statements
This press release contains forward-looking statements, including statements regarding the Company's intention to enter into a management agreement in early 2019 with its majority shareholder, Glencore International AG; and the Company's belief that the settlement agreement will enable the Company to continue to move forward with improved governance, compliance and control procedures and to focus on the completion of operational enhancements to its 75% owned copper and cobalt mine in the DRC with enhanced value for all our stakeholders. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company's forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumption that the settlement agreement will allow the Company to focus on the completion of operational enhancements to its 75% owned copper and cobalt mine.
Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others: litigation and other risks associated with the settlement agreement; as well as those factors disclosed in the Company's current annual information form and other publicly filed documents. Although Katanga has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.
SOURCE Katanga Mining Limited