Neptune Technologies (NEPT) Cited for “Non-Compliance” Following Mine Explosion

By on December 4, 2012

An extensive blast and subsequent fire at a factory owned by Neptune Technologies & Bioressources (NASDAQ:NEPT) in Quebec killed three people, wounded 18, destroyed the factory and demolished the company’s inventory.  The explosion seems to have occurred in one of the reservoirs holding extremely flammable acetone, generally used as paint thinner or nail polish remover.  Neptune produces health products from marine life.

Following the explosion, shares of Neptune fell more than 10% on November 8 and were halted at $3.31 per share.

While the stock remained halted, the Quebec Ministry of Environment handed the company two notices of non-compliance to do with the amount of acetone at the plant and the company’s lack of permission to increase its manufacturing operations.  According to a report released by Radio Canada, Neptune in 2002 was provided approval to amass a total of 33,000 Litres of acetone outside the plant, and another 6,000 L indoors.  But technicians sent to the sight of the devastation estimated that about 15,000 L of acetone had burned — forming an enormous cloud of dark smoke — and another 27,000 L were being held in additional reservoirs at the factory. Based on the technicians’ calculations, Neptune housed 3,000 L more than it was allowed to hold.

Radio Canada also said Neptune never had the right to expand their production, which would have tripled the manufacturing aptitude of the facility at a cost of at least $20 million.  The Quebec government was one of many investors who gave money to fund the expansion of the operation. However, the environment ministry did not give its approval for the expansion to commence.

Shares resumed trading on November 27, and fell 24.47% to close at $2.50 per share.

At least one class action firm has commenced an investigation into whether Neptune violated securities laws.  The investigation is on behalf of Neptune shareholders who acquired the stock between December 12, 2011 and November 8, 2012, and purchasers in Neptune’s registered public stock offering at $4.10 per share which occurred on September 25, 2012.

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