According to the law firm press release, the complaint charges Gold Resource and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company, based in Colorado Springs, Colorado, mines, mills and produces metal concentrates that contain gold, silver, copper, lead and zinc at its El Aguila mining project in the southern state of Oaxaca, Mexico.
The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s operational status and financial projections. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (a) that overly aggressive expansion of Gold Resource’s underground mining operations in the first quarter of 2012 had created operational difficulties in the mine, which were lowering mine production; (b) that Gold Resource was mining in lower grade zones of the deposit; (c) that significant operational efficiency improvements were required at the mine, including the need to upgrade electric power throughout the mine, expand ventilation and handle increased ground water the deeper the mine went, which limited the Company’s ability to mine higher grade stopes; (d) that decreases in long-hole stoping were forcing the Company to process more diluted development ore and mine from areas of the deposit with lower metal grades; (e) that as a result of the foregoing, tonnes from stoping, as a percentage of milled ore, had decreased from an estimated year-to-date high of 55% during the first quarter of 2012 to an estimated year-to-date low of 15% during the second quarter of 2012; and (f) that during the third quarter of 2012, a dispute had arisen between the Company and the buyer of its metal concentrates, with the buyer claiming net adjustments (reductions) to the Company’s provisional third quarter 2012 invoices.
On July 19, 2012, Gold Resource announced preliminary production results for the second quarter ended June 30, 2012, stating that the Company’s second quarter production was lower than expected and the Company was dramatically slashing guidance for fiscal years 2012 and 2013. In response to these revelations, shares of the Company’s common stock fell from its July 19, 2012 closing price of $24.99 per share to $17.34 per share.
Then, on October 17, 2012, Gold Resource again shocked the market announcing preliminary production results for the third quarter ended September 30, 2012, reporting additional reasons for the Company’s now lower than expected third quarter 2012 results, including, but not limited to, a dispute with the buyer of the Company’s metal concentrates resulting in the buyer claiming net adjustments (reductions) to Gold Resources’ invoices. In response to the October 17, 2012 press release, the Company’s common stock fell from its October 17, 2012 closing price of $20.15 per share to $18.01 per share on October 18, 2012, on extremely high volume.
On January 28, 2013, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel. On February 4, lead plaintiff filed an Amended and Consolidated Complaint.
On July 15, 2013, the Court issued an Order dismissing Plaintiff's complaint with prejudice.
On August 1, 2013, the Plaintiffs filed a Notice of Appeal, appealing the July 15 Order.