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