Morganti Legal, P.C., a cross-border law firm that represents investors, is investigating whether Detour Gold Corp. made negligent statements about its investment quality between April 9, 2013 and November 7, 2013.
On April 9, 2013, Detour Gold announced that it was reducing its 2013 production guidance to 350,000 ounces or down 12.5 per cent from its previous target of up to 400,000 ounces. Thereon after and continuing until November 7, 2013, Detour Gold reduced its production guidance down to 240,000 to 260,000 ounces. On November 6, 2013, Detour Gold’s securities closed at $7.76 per share. On November 7, 2013, Detour Gold’s securities closed at $6.35 per share and in 10 trading days the price dropped to $4.43.
Ultimately, Detour Gold only produced 232,287 ounces of gold, or over 45 per cent from its revised target less than seven months earlier. Its annual cash costs materially exceeded its prior projections too. Detour Gold’s securities lost over 80 per cent in value during 2013.
Morganti Legal, P.C. is evaluating possible legal claims on behalf of investors who purchased Detour Gold's securities between April 9, 2013 and November 6, 2013, concerning whether Detour Gold knew or reasonably should have known that its future gold production of 350,000 and 270,000 ounces was still overstated and did not truly reflect the management’s analysis of the then situation.
The announcement came shortly after Detour announced it had raised more than $172.5 million through a public offering of common shares.
The company said it intended to use half of the net proceeds of the offering to repay debt and the remainder for sustaining capital requirements, debt servicing costs and for general corporate purposes and to improve working capital balances.
Detour Gold operates its flagship Detour Lake gold mine, north of Cochrane. The mine has proven and probable reserves of 15.5 million ounces of gold.