Canadian firms sue Barrick over divisive Pascua-Lama project
A group of Canadian law firms are pursuing a class action against Barrick Gold (TSX, NYSE:ABX) and a few of its current and former senior executives, claiming they misrepresented how much risk the miner really faced when it kicked-off construction at the now shelved Pascua-Lama project in South America.
The suit, filed Wednesday with the Ontario Superior Court of Justice, alleges the Toronto-based company marketed the project as “feasible” and “highly economic,” while the company knew or should have known that it would have to overcome significant obstacles, Canadian Press reports.
“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 contends.
The $8.5 billion gold and silver project straddling the Chile-Argentina border has brought one headache after another to the world’s top bullion producer, from protests, strike threats and fines to costs overrides.
Last year the proposed mine suffered a number of defeats in Chilean courts about water use and the impact on glaciers in the area.
Argentina, on the other hand, has been a vigorous backer 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. Barrick recently laid off 1,500 of the 5,000 workers on the Argentinian side.
Pascua Lama, which would produce about 800,000 to 850,000 ounces of gold a year in the first full five years of its 25 year life, was scheduled to start production in the second half of 2014. Last year, however, Barrick decided to suspend the controversial project, which was once set to become one of the top gold and silver mines in Chile, the world’s N.o1 copper producer.
Yesterday’s suit is being handled by three law firms: Koskie Minskie; Sutts, Strossberg, and Groia & Company. They are demanding financial compensation for nearly $6 billion and a pronouncement that Barrick is liable for the acts and omissions of the individual defendants, including former chief executive Aaron Regent and the current leader, Jamie Sokalsky.
Shares on the company took a steep dip in both the Toronto and New York stock exchanges on the news. The stock recovered a bit after mid-day and was trading at $18.17 at 1:55 pm ET in Canada, a 0.82% drop from Wednesday’s closing price.