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Barrick to defend itself ‘vigorously’ against Canadian class action

Barrick to defend itself ‘vigorously’ against Canadian class action

Photo by Reuters

2nd May 2014

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – The world’s top gold producer on Friday said it would “vigorously defend” itself against class actions instigated by Toronto-based Merchant Law Group with the Courts in Ontario and Alberta, alleging that between May 7, 2009, to May 23, 2013, Barrick Gold had misrepresented the status of its roughly $8.5-billion Pascua-Lama copper/gold project straddling the Argentine/Chilean border.

Merchant Law Group last Friday announced that it had started Canada-wide multibillion-dollar shareholder class actions seeking compensation for purchasers of Barrick securities, whom according to the law firm, had lost billions of dollars as a result of Barrick's “misrepresentations and failures” regarding the Pascua-Lama project.

“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,” Barrick spokesperson Andy Lloyd said in an emailed statement to Mining Weekly Online.

During the fourth quarter of 2013, Barrick announced the temporary suspension of construction at Pascua-Lama, except for activities required for environmental and regulatory compliance.

The project encountered problems last year when a local indigenous community, aided by nongovernmental organisations, complained about water from the construction processes polluting the Estrecho river, which communities in the valley need for agriculture and personal use.

The complainants said excessively high concentrations of arsenic, aluminium, copper and other elements had been found in the water near Pascua-Lama, which had become one of the most unpopular mining ventures in Chile.

Barrick denied that it had polluted the river, but agreed to build a new water management system.

After regulators stopped construction on the Chilean side of the project at the end of 2012, the company resolved to slow construction and, currently, to mothball the project.

Barrick also has emerging labour unrest on the Chilean side to deal with.

These delays and additional infrastructure commitments are expected to further raise the project’s total cost.

The company expects to spend about $300-million on Pascua-Lama during 2014.

The company on Wednesday said that the ramp-down was on schedule to be complete by midyear and that the majority of demobilisation had already taken place.

It said that a decision to restart development would depend on improved economics and reduced uncertainty related to legal and regulatory requirements. The remaining development would take place in distinct stages with specific work programmes and budgets to facilitate more efficient execution and improved cost control.

Barrick added that it continued to explore opportunities to improve the project's risk-adjusted returns, including strategic partnerships or royalty and other income-streaming agreements.

The deposit is located on the border between Chile and Argentina, with 75% of the orebody lying in Chile and 25% in Argentina.

It is a world-class resource of almost 18-million ounces of National Instrument 43-101-compliant proven and probable gold reserves and 676-million ounces of silver contained within the gold reserves, with a mine life of 25 years. It is expected to produce between 800 000 oz and 850 000 oz of gold and 35-million ounces of silver in its first five years of production.

Edited by Creamer Media Reporter

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