* Company said to mislead over mine's development schedule
* Judge lets part of case against Kinross, ex-CEO proceed
* Kinross calls surviving claims without merit
By Jonathan Stempel
NEW YORK, March 22 Kinross Gold Corp
failed on Friday to win dismissal of a U.S. lawsuit accusing the
Canadian gold miner of defrauding shareholders over a mine in
Mauritania, in West Africa, that has contributed to more than $6
billion of company writedowns.
The decision by U.S. District Judge Paul Engelmayer in
Manhattan stems from Kinross's $7.1 billion acquisition of Red
Back Mining Inc in 2010, which gave it control of the Tasiast
gold mine in Mauritania and the Chirano gold mine in Ghana. The
suit relates to the Tasiast mine.
While calling the matter a "close question," the judge said
shareholders may sue over losses between Aug. 10, 2011, when
Kinross delayed a feasibility study for the Tasiast mine, and
Jan. 17, 2012, a day after it took a $2.94 billion noncash,
goodwill writedown related to the Red Back mines.
Kinross took a separate $3.21 billion writedown related to
the mines on Feb. 13, 2013.
The judge also let shareholders pursue claims against four
Kinross executives including Tye Burt, who was ousted as chief
executive last August.
"We are gratified the court has sustained most of the
complaint, and are looking forward to obtaining recovery for the
shareholders who were defrauded," said Stanley Bernstein, a
partner at Bernstein Liebhard, representing the plaintiffs.
In a statement, Kinross said: "The company believes that the
surviving claims are without merit, and we will continue to
vigorously defend against the litigation."
A lawyer for the company and the individual defendants
declined to comment.
Shareholders led by the City of Austin Police Retirement
System pension fund in Texas accused Kinross of inflating its
share price by misleading them about the quality of its due
diligence for, and timetable to develop, the Tasiast mine.
Kinross shares fell more than 36 percent between Aug. 10,
2011 and Jan. 17, 2012 in both the United States and Canada, and
following further declines they now trade at roughly half their
levels at the start of that period. Friday's decision covers
shares bought on the New York Stock Exchange.
In his 53-page decision, Engelmayer said the plaintiffs
could not pursue claims over statements made before Aug. 10,
2011, finding no showing that Kinross intended to mislead them.
But he said claims could go ahead over statements on Aug.
10, 2011 and Nov. 2, 2011 confirming the expected construction
and production schedule for the Tasiast mine.
"Austin has satisfactorily alleged that ... Kinross was
reckless in reaffirming its previously announced schedule,"
Engelmayer wrote. "Further, Austin fairly alleges that, upon
becoming aware that the old schedule was unrealistic, Kinross
had a duty to correct that schedule."
Kinross shares closed Friday in New York up 2 cents at
$8.13, and up 2 cents at C$8.32 in Toronto. The company's market
value is about $9.3 billion, Reuters data show.
The case is City of Austin Police Retirement System v.
Kinross Gold Corp et al, U.S. District Court, Southern District
of New York, No. 12-01203.