Barrick named in Canadian class action suit over troubled Pascua-Lama project
TORONTO - Several Canadian law firms are pursuing a class action against Barrick Gold Corp. (TSX:ABX) and some of its current and former senior officers, alleging they misrepresented how much risk the company faced when it undertook construction of the multibillion-dollar Pascua-Lama mine project in South America.
The project involves one of world's largest deposits of gold, estimated at nearly 18 million ounces, but the company missed its original target of starting production in early 2013 due to opposition from local groups and Chilean authorities.
The suit, filed Wednesday with the Ontario Superior Court of Justice, alleges Barrick described Pascua-Lama as a feasible and highly economic project due to the low cost to construct the mine and to produce gold and silver from it, adding that the company knew or should have known that it would have to overcome significant obstacles.
"The mine is located underneath glaciers in the Andes mountains and the environment is subject to extreme temperature and weather changes. Barrick is a sophisticated mining company that has constructed and operated mines all over the world. The challenges in developing Pascua-Lama were or should have been readily apparent to Barrick," the claim alleges.
"There was also considerable opposition to the Pascua-Lama project from local communities that depended on the water supply the glaciers provided. These communities, along with various environmental groups, were concerned about adverse impacts of mining on the glaciers and contamination of the water supply."
Barrick announced on Oct. 31, following several court and regulatory setbacks in Chile, that it was suspending construction at the project and was uncertain when it would resume. The project was originally estimated to cost between US$2.8 billion and US$3 billion but the estimate had risen to US$8.5 billion by the time construction was halted.
The suit is looking to be recognized as a class action seeking compensation on behalf of investors who acquired Barrick shares between May 7, 2009, â€” when Barrick announced it would go ahead with construction of Pascua-Lama â€” and Nov. 1, 2013, a day after it announced the project suspension.
According to public stock records, Barrick shares were worth $38.55 on May 7, 2009, and worth only $18.77 on Nov. 1, 2013. They closed Wednesday at $18.32.
Among other things, the suit is asking for financial compensation totalling about $6 billion and a declaration that Barrick is liable for the acts and omissions of the individual defendants, who include former chief executive Aaron Regent and his successor, Jamie Sokalsky, who is Barrick's current CEO.
None of the allegations has been tested in court and the litigation hasn't been registered as a class action.
"Barrick disputes the allegations, and will defend itself against any lawsuit vigorously," company spokesman Andy Lloyd said in an email responding to a request for comment.
The latest suit is being handled by three law firms: Koskie Minskie; Sutts, Strossberg, and Groia & Company. Another firm, The Merchant Law Group, previously filed suits in Ontario and Alberta on behalf of those who bought shares between May 7, 2009, when construction was announced, and May 23, 2013, when Chile's environment regulator stopped construction and issued a fine against Barrick, citing "serious violations" of its environmental permit.
The lead plaintiff named in the latest suit is Michael Weiner, who purchased Barrick shares between July 29, 2009, and July 4, 2013, on various exchanges, including the Toronto Stock Exchange.
Read more Business News
- $50M for rail corridorCentral Okanagan - 1:38 pm
- Vibey is home!Kelowna - 4:44 pm
- Crash driver allegedly impairedKelowna - 2:57 pm
- Fruitful weatherCentral Okanagan - 12:56 pm
|QHR Technologies Inc||1.21||0.00|
|Anavex Life Sciences||0.26||0.00|
|Copper Mountain Mining||2.88||-0.04|
|Sunrise Resources Ltd||0.025||-0.005|
|Mission Ready Services||0.215||-0.015|
Establishing a joint account may seem like a great strategy at first glance. However, there are many factors that must be considered before taking this action. This article will explore the use of &ls...
Let’s face it; nobody wants to pay for legal services if they do not have to, but if you have been injured in an accident you may have thought about hiring a lawyer to help you navigate your cla...
My screen printing business, like many others, started as a one-man operation. It was located in a small building, not much better than a shack, with a telephone, a big table where I ate lunch and (oc...