York - DRDGold (DRD) faces a purported class action lawsuit in the United States over allegations of securities violations.
In a press release, law firm Lerach Coughlin Stoia Geller Rudman & Robbins said it filed the suit in the US District Court for the Southern District of New York on behalf of buyers of DRDGold stock between October 23 2003, and February 24.
According to the lawsuit, the gold exploration and mining company made statements regarding the successful restructuring of its northwest operations in South America; its ability to reduce the impact of the increasing value of the South African rand versus the US dollar; and the increasing strength of its balance sheet.
The suit claims DRDGold`s problems with its northwest operations were never fully resolved and resulted in an impairment charge for the full value of its mining assets there.
Also, the suit alleges the company continued to be hurt by the increasing value of the rand.
According to the suit, such problems led DRDGold to announce that it might not be able to operate as a going concern. When the news was publicized, shares fell more than 25%, the suit said.
A spokesperson from DRDGold couldn`t immediately be reached for comment.
A spokesperson for the law firm did not immediately return phone calls to further detail the suit.
DRDGold`s American depository shares ended Monday up 3c, or 2.9%, to $1.07, on volume of 1.6 million, compared with average daily volume of 2.4 million.
DRDGold`s shares ended up 75c at 760c on the JSE Securities Exchange South Africa on Monday from Friday`s close of 685c.
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