South Gobi (01878): Class Action Settlement

According to the Zhitong Finance App, South Gobi (01878) issued an announcement. According to the judgment (judgment) issued by Judge Morgan of the High Court of Ontario (Ontario Court) on December 3, 2025, it was previously disclosed that the settlement of the class action lawsuit (class action lawsuit) brought against the Company has been approved by the Ontario Provincial Court. The class action lawsuit relates to the re-listing of certain financial statements (restatements) previously disclosed by the Company in its public documents.

As previously disclosed in the Company's public documents, in January 2014, the Canadian law firm Siskinds LLP filed a class action lawsuit against the Company, several of its former senior employees and directors, and their former auditors (former auditors) in the Ontario courts.

In order to commence and continue a class action lawsuit, the plaintiff must seek permission from the court under the Ontario Securities Act (to allow the motion) and establish that the lawsuit is a class action under the Ontario Class Action Act. On November 5, 2015, the Ontario Court of Justice ruled on the leave motion, dismissing lawsuits against former senior employees and directors, and allowing lawsuits against misstatements affecting the company's securities trading in the secondary market due to alleged rearrangement of the company's content. The plaintiff's lawsuit against the former auditor was settled before filing a motion for leave.

Both the plaintiff and the Company appealed the leave motion decision to the Ontario Court of Appeals. On September 18, 2017, the Ontario Court of Appeals denied the Company's appeal to allow the motion to allow the plaintiff to commence and continue the class action lawsuit. Meanwhile, the Ontario Court of Appeals allowed the plaintiff to proceed with its lawsuit against former senior employees and directors in relation to the re-listing.

The company applied for an appeal to the Supreme Court of Canada in November 2017, but the Supreme Court of Canada rejected the appeal in June 2018.

In December 2018, the parties agreed to comply with the certification order. The lawsuit against the former senior employees and directors was withdrawn, and only the class action lawsuit against the Company was continued, and the plaintiff in the class action lawsuit (the plaintiff in the class action lawsuit) was continued, and the plaintiff in the class action lawsuit was allowed to file a class action lawsuit against the Company only.

With the participation of our insurance company and the presidency of George Strathy, former Chief Justice of Ontario, the plaintiff and defendant's attorneys successfully completed the mediation process (mediation) on August 11, 2025. The parties entered into a written agreement (settlement agreement) on October 2, 2025 to reach a settlement (the settlement), subject to final approval by the Ontario Court of Justice in accordance with the provisions contained in the Class Action Act (Ontario).

According to the settlement agreement, the plaintiff in the class action lawsuit settled the class action lawsuit with the Company. The settlement amount was 6.8 million Canadian dollars, including all liabilities, class attorney fees, notice and administrative expenses, and expenses related to the lawsuit and settlement (settlement costs). The settlement costs were paid by the company's insurance company, and the insurance company paid the plaintiff's attorney in the class action lawsuit.

The final matter to be resolved for final approval of the settlement is the end of the appeal period of 30 days from the date of the judgement approving the settlement. The appeal period expires on January 2, 2026, during which time the judgement can be appealed on or before that date.

This settlement is based on the parties' consideration that if the proceedings continue, the costs may exceed the amount of settlement agreed upon by the parties, so the settlement was made in economic considerations. After the settlement is finally effective and based on consideration of the settlement costs, the plaintiff in the class action agreed to permanently and completely discharge any legal claims that the Company and other exempted parties may have in respect of the restated matters, and promised not to take any further action with respect to the relevant matters.

If the settlement takes effect, the settlement amount is within the Company's insurance limit. As a result, the Company has determined that no provision is required to account for this matter in its financial statements.