Gammon Gold Named in Lawsuit

After making gains on the strength of $1000 gold prices on Thursday, Gammon Gold Inc. (GRS) shares were down 9% in early trading on Friday morning. On Thursday night, the company that it has been named as a defendant in a statement of claim.

According to Gammon, the plaintiff alleges that Gammon's 2007 prospectus contained misstatements with respect to production run rates and the adequacy of Gammon's internal controls. The plaintiff also alleges inappropriate option granting and is seeking an order certifying the action as a class proceeding and C$80-million in damages.

Gammon Gold said the allegations are without merit.

Rene Marion, CEO of Gammon Gold stated:

The company has brought a motion asking the court to dismiss that claim as groundless and lacking merit and is awaiting a hearing on that issue. The company denies the plaintiff's allegations that it misled investors with respect to production run rates and considers the allegations in this claim to be without merit and intends to vigorously defend its position.

Comments

[Trade Radar...:]

I read that Gammon had been cleared by a Canadian law firm brought in to investigate a similar claim brought in a Canadian class action suit regarding option grants. This new plaintiff has not yet seen the report. This may not be as bad as it seems.

2008 Mar 14 02:28 PM

[Investors edge:]

Wrong! The law firm is McInness Cooper. A Halifax based law firm that actually has been representing Gammon Gold since 1998. The company was not cleared of anything. The law firm simply state that their client (Gammon Gold) did not violate Gammon Gold's options agreements.

FYI. The "McINNESS" in McInness Cooper is also a founding shareholder of Gammon Gold! Don't leave comments unless you know them to be factual! Thanks.

2008 Mar 14 04:39 PM

[Trade Radar...:]

Investor's Edge -- That's what I get for believing press releases. Thanks for the clarification.

2008 Mar 14 04:55 PM

[Mongoose:]

Does anyone know if the options grants are valid, or if there is some reason that they may have a problem?

2008 Mar 15 09:07 AM

[User 119353:]

Another lawsuit. Throw it on the pile of lawsuits that are about to hit every one of the Wall Street firms. This lawsuit will meet the same death as all the previous lawsuits-ie the judge will say 'Caveat Emptor' all the risks were tabled. Would not be surprised to find out a major short hedge fund launched this suit to try to buy back their position. Things are finally looking up at GRS at the mine site.

2008 Mar 15 10:02 AM