Katanga Mining Limited (TSX: KAT) disclosed that some of its financial statements will likely require restatement following issues with past accounting
SmallCapPower | August 2, 2017: Katanga Mining Limited (TSX: KAT) shares fell 28% to $0.53 on Monday after Katanga Mining announced that it is conducting a review of certain of the Company’s past accounting, and that some financial statements will likely require restatement.
Related: Katanga Mining Stock is Riding High on the Cobalt Price, More Upside Seen
Shares of Katanga Mining then rebounded 28% on Tuesday to close at $0.68 a share.
The Independent Directors are working with Management, Katanga’s external auditors, Deloitte & Touche, the Company’s outside legal counsel and outside accounting advisors to review historical accounting relating to the production of copper cathode, copper concentrates and stockpiled ore, which may have an impact on the occurrence, classification and valuation of inventories and property, plant and equipment.
The conduct of the review and analysis of its conclusions are expected to cause the preparation and filing of the Company’s unaudited interim financial statements for the three and six months ended June 30, 2017 and accompanying MD&A (“Q2 Filings”) to be delayed beyond the August 14, 2017 deadline under National Instrument 51-102 – Continuous Disclosure Requirements. This delay in the reporting might further drag down the Katanga Mining stock price in the coming days. But the selling shouldn’t have any significant impact as Katanga Mining shares have surged over 250% YTD as speculators continue to be drawn to cobalt due to its use in batteries, especially for electric vehicles.
In terms of valuation, Katanga Mining stock currently trades at price to book value of 0.96x
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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