Katanga Mining Limited – s. 144(1)
Headnote
Section 144 of the Securities Act (Ontario) -- Revocation of management cease trade order -- Issuer is up-to-date with its current continuous disclosure filing obligations under Ontario securities law, other than with respect to certain historical annual and interim financial statements and management's discussion and analysis that the Issuer has not refiled -- Issuer has refiled, among other things, audited annual financial statements for each of the last four years and management's discussion and analysis for each of the last three years -- Impracticable to refile historical filings and such filings would be of limited or no use to investors.
Applicable Legislative Provisions
Securities Act, R.S.O., c. S.5, as amended, ss. 127, 144.
IN THE MATTER OF
THE SECURITIES ACT,
R.S.O. 1990, CHAPTER S.5, AS AMENDED
AND
IN THE MATTER OF
CERTAIN DIRECTORS AND OFFICERS OF
KATANGA MINING LIMITED
ORDER
(Subsection 144(1))
WHEREAS on August 15, 2017, a Director (the "Director") of the Ontario Securities Commission (the "Commission") made an order under paragraphs 2 and 2.1 of subsection 127(1) of the Securities Act (Ontario) (the "Act") and subsection 127(4.1) of the Act that the persons and companies listed in Schedule A (the "Respondents") cease trading in, and acquisitions of, whether direct or indirect, the securities of Katanga Mining Limited (the "Corporation") until two full business days following the receipt by the Commission of all filings that the Corporation is required to make under Ontario securities law, or further order of the Director (the "Katanga MCTO");
AND WHEREAS the Director made the Katanga MCTO upon hearing evidence that: (a) the Corporation had announced the need to restate its consolidated financial statements for the years ended December 31, 2016, 2015 and 2014 and related management discussion and analysis ("MD&A") and all interim consolidated financial statements and interim MD&A since December 31, 2014 and had not done so as of the date of the Katanga MCTO; (b) the Corporation had failed to file its interim financial statements for the six-month period ended June 30, 2017 and related MD&A by the required filing date under Ontario securities law; and (c) each of the Respondents had, or may have had, access to material information with respect to the Corporation that had not been generally disclosed;
AND WHEREAS the Corporation has applied to the Commission for a revocation of the Katanga MCTO pursuant to subsection 144(1) of the Act;
AND UPON the Corporation having represented to the Commission that:
1. The Corporation is a corporation existing under the Business Corporations Act (Yukon), with a registered office located at Suite 300, 204 Black Street, Whitehorse, Yukon Y1A 2M9 and a head office located at Obmoos 4, Zug, CH-6301, Switzerland.
2. The Corporation is a reporting issuer or equivalent in each of the provinces and territories of Canada, and its common shares are listed on the Toronto Stock Exchange and trade under the symbol "KAT".
3. The Corporation has restated its consolidated annual financial statements for the years ended December 31, 2016 and 2015, and for the quarterly periods ending March 31, 2017 and 2016 (the "Restatement").
4. The Restatement resulted in a delay in filing the Corporation's restated consolidated financial statements for the year ended December 31, 2016 and restated financial statements for the period ending March 31, 2017, and for the quarterly periods ending June 30, 2017 and September 30, 2017 and related filings (collectively, the "Delayed Filings") by the required filing dates under Ontario securities law.
5. On November 20, 2017, the Corporation completed the filing of its Delayed Filings and is up-to-date with its current continuous disclosure filing obligations under Ontario securities law, other than with respect to the Prior Unamended Filings (as defined below).
6. On December 18, 2018, the Commission approved a global settlement agreement between Staff of the Commission and the Corporation and certain of its former directors and officers relating to an investigation by Staff into certain of the Corporation's historical disclosures.
7. The Corporation has not re-filed: (a) annual audited financial statements for the years prior to 2015; (b) MD&A for the years prior to 2016; and (c) interim financial statements and MD&A for interim periods prior to 2017 (collectively, the "Prior Unamended Filings").
8. The Corporation believes that it will be impracticable to amend the Prior Unamended Filings to rectify deficiencies therein due or related to the Restatement, due to, among other factors, identified material weaknesses in the Corporation's internal controls over financial reporting, turnover in its finance personnel, changes in accounting systems, documentation weaknesses, and the passage of time generally.
9. The Corporation believes that, if the Prior Unamended Filings were amended, the information that would be contained therein would in large part repeat the disclosure contained in the Delayed Filings and would be of limited or no use to investors, and that the Delayed Filings and all financial statements, MD&A and related materials filed since the Delayed Filings include all financial and other information needed for current investor understanding of the Corporation.
10. Although the Corporation has not amended the Prior Unamended Filings, the Corporation's annual financial statements for the years ended December 31, 2016 and 2015, include certain restated comparative consolidated financial information for each of the eight most recently completed quarters ended on, and prior to, December 31, 2016. In addition, the Corporation's consolidated financial statements for each of the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 include comparative restated financial results for each of the corresponding quarterly periods in 2016.
11. Given that the Corporation has not amended its Prior Unamended Filings, the Katanga MCTO does not expire pursuant to its terms.
AND UPON the Director being satisfied that it would not be prejudicial to the public interest to revoke the Katanga MCTO;
IT IS ORDERED, pursuant to subsection 144(1) of the Act, that the Katanga MCTO be and is hereby revoked.
DATED at Toronto, Ontario this 27th day of May, 2019.