Barrick Gold must face U.S. lawsuit over mothballed mine

Wed Apr 1, 2015 4:37pm EDT
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By Jonathan Stempel

NEW YORK (Reuters) - Barrick Gold Corp has lost its bid to dismiss a U.S. lawsuit that accuses the world's largest gold producer of concealing problems at a troubled South American mine and of fraudulently inflating the company's market value by billions of dollars.

U.S. District Judge Shira Scheindlin in Manhattan ruled on Wednesday that shareholders can pursue class action claims that Barrick intended to deceive them about environmental problems afflicting its Pascua-Lama project on the border of Argentina and Chile.

"Though plaintiffs have not alleged a motive, they have sufficiently alleged strong circumstantial evidence of conscious misbehavior or recklessness," the judge wrote in a 55-page decision.

Scheindlin also said shareholders can pursue claims that Barrick misled them about its accounting for the project.

The judge dismissed claims alleging that Barrick intentionally misled them about costs and production delays.

She also dismissed claims related to transactions conducted on the Toronto Stock Exchange, saying a key U.S. securities fraud law does not reach that far.

Jim Hughes, a lawyer for the plaintiffs, said in a phone interview: "It is a very good result for shareholders, and allows us to go forward on several very strong claims."

Barrick bought the untapped Pascua-Lama mine in 1994, and had been counting on it to generate a large percentage of its overall gold production.   Continued...