Barrick Heading for Trial in Trimmed Case Over Andes Gold Mine

Barrick Gold Corp. gained a partial victory in an investor lawsuit over the construction of a gold mine high in the Andes on the border of Argentina and Chile.

A U.S. judge threw out investors’ claims that the Canadian company misled shareholders with statements about the multibillion-dollar project’s costs and schedules, including that the Pascua-Lama mine was “low-cost.”

“This refers to anticipated costs of mining each ounce of gold once the project was fully developed, not the cost of developing Pascua-Lama,” U.S. District Judge Shira Scheindlin wrote in a 55-page pretrial ruling Wednesday.

The judge also refused to let investors who traded Barrick shares in Canada pursue the lawsuit.

Barrick will have to defend some claims about the environmental concerns amid nearby glaciers and its accounting of the project.

The investors “have sufficiently alleged strong circumstantial evidence of conscious misbehavior or recklessness,” relating to statements about environmental approvals for the project and its accounting, Scheindlin wrote.

Barrick acquired the Pascua-Lama property in 1994 and planned to carve a massive open-pit gold mine, as high as 17,000 feet (5,200 meters) above sea level, in the Andes mountains. The company announced the start of construction in 2009, estimating the cost of the project at $2.8 billion to $3 billion, with production starting in 2013.

By 2012 the estimated cost surged to $8 billion. Barrick suspended the construction in 2013 and said it would take a $5.1 billion writedown in the second quarter of that year.

Union Asset Management Holding AB and LRI Invest SA sued on behalf of stockholders who purchased shares from 2009 to 2013, claiming they incurred losses as share prices fell on Barrick’s disclosures of the rising costs, delayed production and the eventual suspension of the project.

The case is In re Barrick Gold Securities Litigation, 13-cv-03851, U.S. District Court, Southern District of New York (Manhattan).

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