Things are evidently getting worse for Pure Gold Mining (TSXV: PGM). After announcing last week that it failed to hit 2021 guidance and is now facing financial struggles, the firm yesterday indicated it has become the subject of a civil claim in the British Columbia Supreme Court.
As it turns out, following the announcement last week that the company was in need of short term financing within the next 30 days to keep its operations going, several law firms promptly began examining whether the company had mislead the investing public. At minimum, three law firms have begun investigating whether there is cause for a class action lawsuit.
Rosen Law was one of the first such firms to issue notice of an investigation into the company, with the company examining if “PureGold may have issued materially misleading business information to the investing public.” Specifically, the company is examining the “severe mine planning and scheduling deficiencies that negatively impacted [Pure Gold’s] operations in 2021,” and the related impact this had on shareholder holdings following the announcement.
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KND Complex Litigation meanwhile is proceeding with a class action against Pure Gold, its officers and directors, and the underwriters of three separate financings that occurred in 2021 and 2022. Allegations provided here are that the company failed to disclose financial and operational problems being faced by the firm at its Red Lake operations.
The most recent financing, conducted in February, saw $14.0 million raised via a brokered offering at $0.53 per common share, as well as $17.2 million raised via AngloGold Ashanti in a concurrent non-brokered financing. The value of the equity sold under those financings have since more than halved.
Finally, Schall Law also initiated a class action against the firm, again related to the announcement made last Monday. On similar comments, the firm points to the failure to maintain access to high-grade stopes and mine planning and scheduling failures conducted in 2021.
It is unclear at this time specifically which law firm formally filed a class action lawsuit naming Pure Gold and certain other parties as defendants. The plaintiffs currently are seeking certification of the class action lawsuit while making unspecified damages claims for the related losses due to the allegations mentioned. Pure Gold for its part claims states that the complaint is “unfounded and without merit,” and intends to defend the proceeding.
Pure Gold last traded at $0.25 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
