No Gold, But Investors Leave With a $140 Million Settlement

In re Barrick Gold Securities Litigation

After months of delays and the slow and belated disclosure of cost increases and environmental problems, investors of Barrick Gold Corporation (Barrick), the world’s largest gold mining company, learned that the company’s flagship project was too good to be true. But with the help of Labaton Sucharow, as liaison counsel, investors left the table with a $140 million settlement.

Barrick first touted Pascua-Lama, an open-pit gold mine located in the Andes mountains, as a low-cost project promising production from one of the world’s largest untapped mines. But months following the initial announcement, investors received continuous updates on increased budgets and delays in the production schedule. On top of that, there were persistent environmental violations, despite repeated promises that proper protocols were in place, ultimately leading to a halt in Pascua-Lama due to a regulatory investigation.

Labaton Sucharow’s work was instrumental to the investor action’s success, particularly the development of all of the confidential witnesses, which led to invaluable information. For example, due to the Firm’s investigative prowess, Partner Jonathan Gardner successfully argued the motion to dismiss, sufficiently showing that the defendants knew (or recklessly disregarded) that they were violating the company’s environmental commitments during construction on the Pascua-Lama mine and that its internal controls for the project were faulty. Additionally, the Firm fought off Barrick’s request for our investigative notes as work product, an attempt to attack the Firm’s investigative process, which was denied after the court itself reviewed our investigator’s notes and found that the complaint accurately reflected those notes.

The case also had significant discovery obstacles, as Barrick is an international mining company, with Pascua-Lama straddling two countries, Chile and Argentina. Not only did the Firm have to maneuver the intricacies of the often covert mining industry, but we also had to work with foreign language witnesses and documents.

On June 15, 2016, the court preliminarily approved a $140 million settlement with Barrick.

Please visit the Barrick Gold case description for more details and case materials.