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Barrick Gold Corp. has been named in a proposed shareholders class action lawsuit that seeks $6-billion in damages because the company allegedly failed to make timely disclosure of problems at its Pascua-Lama mine in South America.
“Barrick misrepresented the progress and feasibility for development and production at the Pascua-Lama mine, repeatedly through the class period,” the plaintiffs allege in a notice of action filed Thursday in the Ontario Superior Court of Justice in Toronto.
Lawsuits in Ontario usually begin with the filing of a legal document called a statement of claim. Filing a notice of action officially launches the case, but also gives plaintiffs more time to follow up with more detailed allegations in the statement of claim.
The document filed Thursday contains allegations that have not been proven in court. “The company is aware that a notice of action has been filed in the Ontario Superior Court of Justice. Barrick disputes the allegations, and will defend itself against any lawsuit vigorously,” the company said in an emailed statement late Thursday.
Plaintiffs have filed similar securities class actions against Barrick over Pascua-Lama in the U.S. federal courts. The company has denied the allegations in the U.S. claims.
In an interview with the Financial Post on Thursday, Barrick chairman Peter Munk was asked what went wrong at Pascua-Lama. His response: “Everything.”
According to the document filed in the Ontario court, Barrick said in 2009 that construction of the mine would cost between $2.8-billion and $3-billion. That estimate was increased several times in the following years, eventually settling on a figure of $8.5-billion in late 2012.
Costs weren’t the only challenge at Pascua-Lama, a massive gold deposit located underneath glaciers in the Andes mountains on the border between Chile and Argentina. The Chilean government approved construction of the mine in 2006, but held Barrick to hundreds of conditions regarding the environment. On April 10, 2013, an appellate court in Chile ordered Barrick to halt construction of the project due to environmental infractions.
Barrick announced at the end of June 2013 it would take an after-tax writedown of up to $5.5-billion related to Pascua-Lama. Then, on Oct. 31, the company said that it would suspend Pascua-Lama indefinitely, and that it would revive the project only if it found a cheaper way to proceed.
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