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RECO.V.TO
id: 1167

ReconAfrica (RECO) CAD $5M Kavango Area Issues Settlement

Late claims are being considered for compensation, subject to approval.
S-233808
Case number
05/30/2020
Class period Start
09/07/2021
Class period End
11/28/2024
Claim deadline

Reconnaissance Energy Africa (RECO) agreed to settle CAD $5,07M with investors in Canadian case to end claims over hiding unconventional means for energy extraction in the fragile Kavango area. They are also paying a $9.4M settlement to U.S. investors for the same case.


Case Details:

Between October 2020 and September 2021, investors were informed of issues with ReconAfrica's energy operations in Namibia and Botswana.
  • These included unconventional extraction, unlicensed drilling, illegal tests, legal violations, improper hiring, and community info lack.
In a report released on September 7, 2021, Viceroy Research criticized ReconAfrica's handling of data from their 6-2 well, calling it an attempt to spin disappointing results.
  • They pointed out unreadable logs, misleading interpretations of water saturation, and the need for fracking, which is illegal in Namibia.
As a result, shares dropped by 12% the same day.

Based on these events, ReconAfrica and its leaders were accused of hiding or misleading about the following details:
  • They planned unconventional extraction methods like fracking in the fragile Kavango area.
  • ReconAfrica conducted unlicensed drilling, illegal water usage, and violated laws, risking future licenses.
  • They also failed to inform locals and focused on the Owambo Basin instead of the claimed Kavango Basin.

ReconAfrica has now decided to end all allegations related to the Kavango area business by paying CAD $5,07M settlement to investors. They are also paying a $9.4M settlement to US investors for the same case.



Case Status
Accepting Late Claims
Alleged Offence
Mismanagement, 
Misleading Statements, 
Omissions
Suspected Party
Directors, 
Management
Security Type
Stocks
Trade Direction
Long
Plaintiffs
Catherine Bowles
Attorneys
Berger Montague (Canada) PC
Defendants
James Jay Park, Scot Evans, Ian D. Brown, Carlos Escribano, Shiraz Dhanani, Mark Gerlitz, and James Granath
Administrator
Berger Montague
Attorney fee
$5,075,000
Trades matching type
FIFO
+$5,075,000
Cash Settlement Amount