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Reconnaissance Energy Africa Ltd.


A securities class action has been filed against Reconnaissance Energy Africa Ltd. f/k/a Lund Enterprises Corp. (RECAF) on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired the publicly traded securities of ReconAfrica between February 28, 2019 through September 7, 2021.  This case has been filed in the USDC – E.D.N.Y.

ReconAfrica purports to engage in the identification, exploration, and development of oil and/or gas assets in Namibia and Botswana, including in the Kalahari Desert and other fragile areas.  Defendant ReconAfrica purports to hold a 90% interest in a petroleum exploration license that covers an area of approximately 25,341.33 km2 located in Namibia; and 100% working interest in a petroleum license, which covers an area of 9,921 km2 located in northwestern Botswana.

The complaint alleges that, throughout the Class Period, Defendants made statements that were materially false and/or misleading because they misrepresented and failed to disclose the following adverse facts pertaining to the Company’s business, operational and financial results, which were known to Defendants or recklessly disregarded by them.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) ReconAfrica’s plan for using unconventional means for energy extraction (including fracking) in the fragile Kavango area; (2) that ReconAfrica would begin unlicensed drilling tests; (3) that ReconAfrica would illegally use water for well testing; (4) that ReconAfrica would illegally store used water in unlined pools; (5) that ReconAfrica would skirt Namibian law and hire an inadequate and inappropriate consultant; (6) that, as a result, ReconAfrica risked future well, drilling, and water-related licenses in Namibia and Botswana; (7) that, as opposed to its representations, ReconAfrica did not reach out nor provide adequate information (including in relevant local languages) through accessible means to those to be impacted by its testing and potential energy extraction; (8) that ReconAfrica’s interests are in the Owambo Basin, not the so-called Kavango Basin; (9) that ReconAfrica has continuously engaged in stock pumping; and (10) as a result of the foregoing, Defendants’ public statements were materially false and/or misleading at all relevant times.

In a series of corrective disclosures released between October 28, 2020 and September 7, 2021, investors learned of various alleged issues with ReconAfrica’s energy operations in Namibia and Botswana that risked the Company’s future well, drilling, and water-related licenses in those countries, including, among other issues, ReconAfrica’s plan for using unconventional means for energy extraction, such as fracking, in the fragile Kavango area; unlicensed drilling tests; illegal well testing and water storage; skirting Namibian law while and hiring an inadequate and inappropriate consultant; and failing to inform or provide adequate information to those to be impacted by its testing and potential energy extraction.

In the last of these corrective disclosures, specifically, a report published by Viceroy Research (“Viceroy”) on September 7, 2021, Viceroy alleged that ReconAfrica’s press statement and presentation of data on their first 6-2 well by Netherland, Sewell & Associates, Inc., was “a clear attempt to put a positive spin on disappointing drill results” that “fail[ed] to do so under further scrutiny.”  Specifically, the Viceroy report alleged, among other issues, that “[t]he 6-2 well is effectively a failure with the porous 950 zone completely saturated with water and the 1350 zone too tight for a conventional commercial play or even reliable readings of water saturation”; that “[w]e would have liked to analyze the [Company’s] logs further, but some parts have been compressed so heavily they are unreadable, we believe intentionally”; that “[t]he deeper zones from 1350 below, which [ReconAfrica] are focused on promoting as validation of the geologic model, are even more disappointing”; that “[ReconAfrica] and Haywood [Securities] interpret the 56% and 61% water saturation values as indicative of 44% and 38% oil saturation[,]” which “is a major misrepresentation of the drill results”; that at least one zone “would require fracking to exploit[,]” which is illegal in Namibia; that despite this, [ReconAfrica] has refused to categorically rule out fracking as an option; and that “[ReconAfrica is] committed to drip-feeding overly positive press releases in the hope of boosting their share price.”

On this news, ReconAfrica’s shares fell $0.68, or 12%, to close at $4.65 per share on September 7, 2021, further damaging investors.

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Securities