Alberta investors man know that a class action lawsuit has been filed by shareholders in the world’s largest gold mining company. The investors say that they lost billions due to Barrick Gold’s ‘misrepresentations” concerning a South American project plagued by environmental and local protests. The mining company denies the allegations and said that they will defend itself vigorously. The case is likely to be followed closely in the business and commercial law community.
The investors bringing the lawsuit bought stock in the Toronto-based mining company between May 2009 and May 2013. The share price dropped by 44 percent during this period largely due to problems encountered by an operation in Argentina and Chile. The biggest drop occurred between April and May 2013 when Barrick sought $3 billion from markets to address debt issues. In addition to the company, the suit names the current chief executive and chief financial officer as well as a former chief executive.
The company halted work on its Pascua Lama project in October 2013, and mothballing the mine is projected to cost Barrick $300 million in 2014. Work on the mine, which is located in the Andes on the border between Argentina and Chile, began in the 1990s. The project has seen setbacks in Chilean courts over issues relating to water use and glacial degradation, but Argentina has been more receptive. At its peak, Argentinian facilities for the mine employed 5,000 workers.
This case demonstrates how business relationships can become acrimonious when things do not go as planned. It also shows how corporate statements and reports are subject to intense scrutiny when projects fail to live up to expectations. A lawyer experienced in business and corporate law may primarily work to assist their client’s with contractual disputes and business transactions, but they could also analyze a company’s actions and plans to help avoid possible legal problems in the future.
Source: Mining.com, “Barrick to launch ‘vigorous defence’ against Pascua Lama class action“, Frik Els , May 04, 2014