WEDNESDAY: The ongoing reports have so far suggested that Barrick Gold Corporation (USA) (NYSE:ABX) has lost its bid in dismissing a USA lawsuit that had blamed it for concealing problems at a troublesome South American mine, further by deceptively inflating market value of the company by a large sum.
As per repots, USA district Judge Shira Scheindlin ruled that shareholders could pursue class action claims that Barrick deceived them about environmental problems afflicting its Pascua-Lama project on the border of Argentina and Chile. Also, for Barrick to have misled them intentionally about its accounting for the project.
In a 55-page decision, the judge described:
“Though plaintiffs have not alleged a motive, they have sufficiently alleged strong circumstantial evidence of conscious misbehavior or recklessness.”
Furthermore, there were further claims made by her regarding transactions that took place on the Toronto Stock Exchange, saying a key U.S. securities fraud law does not reach that far.
According to Jim Hughes (plaintiffs’ lawyer) in a telephone interview:
“It is a very good result for shareholders, and allows us to go forward on several very strong claims.”
As for Barrick, it bought the untapped Pascua-Lama mine in 1994, and since then had been counting on it to generate a large percentage of its overall gold production. However, Barrick had to indefinitely halt its project (where it had already invested US$ 5 billion) in October 2013, due to factors like cost overruns, environmental issues, labor unrest, political opposition and falling bullion prices.
Investors who bought Barrick’s common stock sued for losses covering the period from May 7, 2009 (when Barrick said it would begin construction on Pascua-Lama) through Nov. 1, 2013. Barrick touted Pascua-Lama during this period as a world-class project that will contribute low-cost ounces at double-digit returns, even as it became clear the project would fall short of expectations.
According to Scheindlin:
“The shareholders may amend their lawsuit, though it was difficult to believe that plaintiffs will be able to plead additional facts that are not already included in their almost 200-page, 548-paragraph complaint.”
Barrick shares closed up C$1.33 (9.6% at C$15.18) in Toronto, where its market value is C$17.7 billion (US$ 14 billion).
