Lawsuits stack up against Barrick Gold

LEGAL

A number of class action lawsuits have been filed against Barrick Gold, alleging the world’s largest gold miner misled shareholders about the fallout of its most recent cyanide spill at a flagship mine in Argentina.

The class actions claim the company misled shareholders in public statements it made after a March rupture of a pipeline carrying a gold-cyanide solution at its Veladero mine in Argentina — the third spill at that mine’s leach pad in two years. Cyanide is used at mine sites to separate gold from the ore.

“Barrick Gold and certain of its senior executive officers made a series of materially false and misleading statements to investors about the Veladero mine and the company’s outlook and expected financial performance,” alleges the latest suit, filed Thursday by Kessler Topaz Meltzer & Check LLP.

In the immediate aftermath of the pipeline rupture the company said it did not expect the incident to have a material impact on its bottom line, despite the fact that provincial authorities in Argentina had placed restrictions on its operations.

Barrick did not immediately respond to requests for comment.

Argentina’s provincial authorities have told the company it must overhaul practices and temporarily suspended it from adding cyanide to its leach pad, pending a review of a proposed plan to improve operating systems at the mine.

Barrick left the mine’s annual production guidance unchanged at between 770,000 ounces and 830,000 ounces of gold at all- in sustaining cost of US$ 840 per ounce to US$940 per ounce.

However, in an update contained in its April 2017 first- quarter earnings release, the company cut its outlook by 12 to 18 per cent — to 630,000-730,000 ounces of gold. It hiked its cost projection for all- in sustaining costs of US$ 890 per ounce to US$ 990 per ounce. The shares dropped 11 per cent to close at a six-month low of $ 16.89 in heavy trading the day after the earnings announcement.

At least four law firms announced this week they are looking for investors to join class actions involving claims that Barrick violated federal securities laws in its statements surrounding the spill. The company’s stock fell 2.6 per cent to $ 22.66 in midafternoon trading Thursday.

The Veladero mine is the third largest contributor to the company’s output.

The National Minister of Environment of Argentina has also filed a lawsuit in the Buenos Aires federal court over the incident and another has been filed by locals in provincial courts. Both seek to suspend activities at the site or shut the mine down.

The judge said the investigations into negligence at Barrick are likely to end in sanctions, which could include a fine and operating restrictions.