Barrick Gold reaches $140 million accord in U.S. investor lawsuit

NEW YORK (Reuters) - Barrick Gold Corp ABX.TO has agreed to pay $140 million to resolve a U.S. lawsuit accusing the gold producer of concealing problems at a South American mine and of fraudulently inflating the company's market value, according to court papers.

Barrick Gold Corp Chairman of the board John Thornton speaks during their annual general meeting for shareholders in Toronto, April 28, 2015. REUTERS/Mark Blinch

The settlement, disclosed in papers filed on Tuesday in Manhattan federal court, would resolve a class action accusing Barrick of deceiving investors about environmental problems afflicting its Pascua-Lama project on the border of Argentina and Chile.

“I am pleased we were able to reach this resolution for investors,” James Hughes, a lawyer for the plaintiffs at the law firm Motley Rice, said in a statement.

Barrick in a statement confirmed the $140 million accord and said the value of the settlement is insured.

“Barrick continues to believe that the claims alleged by the lead plaintiffs in the litigation are unfounded, and under the terms of the settlement agreement, the company has not accepted any charges of wrongdoing or liability,” the company said.

The settlement, which requires court approval, comes two months after a federal judge cleared the way for shareholders who bought or acquired Barrick stock between May 7, 2009 and Nov. 1, 2013 to pursue the case as a class action.

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

But cost overruns, environmental issues, labor unrest, political opposition and falling bullion prices contributed to Barrick’s decision on Oct. 31, 2013 to indefinitely halt the project, after it had already spent more than $5 billion.

Investors in the lawsuit contended Barrick touted Pascua-Lama during this period as a “world-class project that will contribute low-cost ounces at double-digit returns,” even as it became clear the project would fall short of expectations.

The lead plaintiffs in the case were Union Asset Management Holding AG and LRI Invest S.A.

The case is In re: Barrick Gold Securities Litigation, U.S. District Court, Southern District of New York, No. 13-03851.

Reporting by Nate Raymond in New York; Editing by David Gregorio