Compass Minerals International, Inc.
A securities class action has been filed has been filed in the USDC – KA. against Compass Minerals International, Inc. (CMP) on behalf of all purchasers of Compass Minerals common stock between October 31, 2017 through November 18, 2018.
The Complaint alleges that during the Class Period, defendants repeatedly assured investors that the continuous mining and continuous haulage (“CMCH”) upgrade at the Goderich, Ontario, Canada (“Goderich” or the “Goderich mine”) was on track to materially reduce costs and boost the Company’s operating results starting in 2018. Defendants’ statements were misleading because they failed to tell investors that costs at the Goderich mine were increasing rather than decreasing. Defendants also misrepresented the amount of salt the Company was able to produce at Goderich using the new CMCH equipment, and failed to disclose how the known and ongoing production shortfalls it was experiencing were reasonably expected to reduce its future operating income.
The true facts, which were then known to or recklessly disregarded by defendants, included:
- Goderich’s new CMCH mining system resulted in the Company incurring additional operating costs rather than cost savings. Cost overages were blamed on one-off items, such as a mine ceiling collapse incident, to hide operating costs associated with the CMCH upgrade;
- Goderich’s new CMCH mining system was unable to produce targeted levels of salt during this period. The Company’s salt production consistently fell below internal expectations and was less than one-half of the salt it needed to produce to generate the anticipated cost savings;
- the purported annual salt production capacity for Goderich of eight million tons was significantly overstated. Although Goderich had been able to produce nearly eight million tons of salt annually using drill and-blast mining, Goderich was discontinuing that method of producing salt, and the CMCH system was not capable of mining that level of salt during this period;
- the purported anticipated annual cost savings attributed to the new CMCH mining system were significantly overstated. Even at targeted production levels, Goderich’s CMCH mining system was expected to generate significantly less than the $30 million in annual cost savings the Company had represented to investors;
- the purported realized cost savings attributed to the new CMCH mining system were significantly overstated. Cost savings generated by other unrelated projects at Goderich were attributed to the CMCH upgrade; and
- as a result, defendants’ statements about the Company’s Salt segment business condition and prospects were materially false and misleading when made.
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