Barrick pays $140m to settle US Pascua-Lama lawsuitPublished by MAC on 2016-06-08
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Barrick pays $140m to settle Pascua-Lama lawsuit
31 May 2016
Barrick Gold has agreed to pay $140 million to resolve a US class-action lawsuit that accused the world's largest gold producer of distorting facts related to its mothballed $8.5 billion Pascua-Lama project in South America.
Barrick confirmed the agreement disclosed in papers filed on Tuesday in Manhattan federal court, adding that the settlement is insured. In a statement the Toronto-based company said it "continues to believe that the claims alleged by the lead plaintiffs in the litigation are unfounded, and under the terms of the settlement agreement, the company has not accepted any charges of wrongdoing or liability."
The lawsuit covers investors who acquired Barrick stock between May 7, 2009 and May 23, 2013. Shares in the company lost 44% of its value over that time period, with a large chunk of the losses coming in April and May that year. The class action alleged Barrick shareholders lost billions of dollars as a result of the company's "misrepresentations and failures" regarding Pascua-Lama.
After falling to 25-year lows in 2015, Barrick stock has rallied this year and the counter was worth $18.8 billion in New York on Tuesday, a 127% year-to-date jump.
The Chilean government approved construction of an open-cut gold and silver mine in 2006, but held Barrick to hundreds of conditions regarding the environment, particularly concerning glaciers surrounding the project high in the Andes.
On April 10, 2013, an appeals court in Chile ordered the miner to halt construction of the project over environmental concerns. In October that year, Barrick decided to halt the technically challenging project indefinitely citing massive cost overruns and nose-diving bullion prices.
The company said at the time it would resume it only if it found a cheaper way to proceed and earlier this month it revealed it was re-evaluating plans for the project. Barrick said it wasn’t ruling out a possible partnership to bring the project to completion.
Argentina has been an enthusiastic supporter of the project – while only around a fifth of the deposit is located in Argentina many of the above-ground facilities will be built on that side of the border.
If it ever comes into production Pascua-Lama would produce about 800,000 to 850,000 ounces of gold and 35 million ounces of silver per year in the first full five years of its 25-year life.