SOUTHGOBI (01878) announced that the Ontario Superior Court of Justice has approved the previously disclosed settlement of a class action lawsuit against the company, as per the judgment issued by Justice Morgan on December 3, 2025. The class action relates to the restatement of certain financial statements (Restatement Matters) previously disclosed in the company’s public filings.
As previously disclosed, in January 2014, Canadian law firm Siskinds LLP filed the class action in the Ontario court against the company, certain former officers and directors, and its former auditor (Former Auditor) regarding the Restatement Matters. To proceed with the lawsuit, the plaintiffs were required to obtain court approval under Ontario securities laws (Leave Motion) and certify the action as a class proceeding under the Ontario Class Proceedings Act.
On November 5, 2015, the Ontario court ruled on the Leave Motion, dismissing claims against the former officers and directors while allowing the action against the company to proceed, alleging that the Restatement Matters led to misrepresentations affecting the secondary market trading of the company’s securities. The plaintiffs’ claims against the Former Auditor were settled prior to the Leave Motion. Both the plaintiffs and the company appealed the Leave Motion ruling.
On September 18, 2017, the Ontario Court of Appeal dismissed the company’s appeal, permitting the plaintiffs to proceed with the class action. The court also allowed the plaintiffs to continue their claims against the former officers and directors. The company sought leave to appeal to the Supreme Court of Canada in November 2017, but the appeal was denied in June 2018.
In December 2018, the parties agreed to a certification order, under which claims against the former officers and directors were withdrawn, leaving only the class action against the company. Subsequently, the plaintiffs (Class Plaintiffs) were permitted to proceed solely against the company.
With the participation of the company’s insurer and under the mediation of former Ontario Chief Justice George Strathy, the parties successfully concluded mediation on August 11, 2025. A written settlement agreement (Settlement Agreement) was finalized on October 2, 2025, contingent upon final approval by the Ontario court under the Class Proceedings Act.
Under the Settlement Agreement, the Class Plaintiffs and the company agreed to settle the class action for CAD 6.8 million, covering all liabilities, class counsel fees, notification and administrative costs, and related expenses (Settlement Amount). The Settlement Amount was paid by the company’s insurer to the plaintiffs’ legal representatives.
The final step for the settlement to take effect is the expiration of a 30-day appeal period following the court’s approval judgment, ending on January 2, 2026. The settlement was reached considering that further litigation costs would likely exceed the agreed Settlement Amount.
Upon finalization, the Class Plaintiffs will unconditionally and permanently release the company and other exempt parties from any legal claims related to the Restatement Matters and refrain from further action. As the Settlement Amount falls within the company’s insurance coverage, no additional provisions are required in its financial statements.