Institutional investors led by Union Investment in $140m settlement with Barrick over Pascua-Lama mine

German asset manager was lead plaintiff in action over controversial mining project

A group of institutional investors led by German asset manager Union Investment have agreed to a $140m preliminary settlement with Canadian mining group Barrick Gold relating to its Pascua-Lama gold mine on the border of Chile and Argentina.

The initial complaint dates back to June 2013 and Union Asset Management was named as lead plaintiff, along with LRI Invest, a Luxembourg-based asset manager owned by German private equity house Augur Capital, in March this year. Other investors involved include the UK’s Surrey Pension Fund and the Rhondda Cynon Taf Pension Fund, the £2.4bn Local authority scheme in south Wales.

The investors alleged that Toronto-based Barrick made misleading statements about its compliance with environmental regulations governing the development of the mine, and also about its internal controls over financial reporting.

It was also alleged that Barrick’s stock price was artificially inflated because of the failure to disclose this material information.

Both sides have now concluded that the settlement is “advantageous, considering the risks and uncertainties to each side of continued litigation”.Barrick confirmed the settlement of the pending class action lawsuit in the US District Court, Southern District of New York, adding that the value of the settlement is insured.

But it said it continues to believe the allegations are “unfounded”; under the terms of the agreement it has not accepted any charges of wrongdoing or liability.

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

Barrick bought the mine, which is located 15,000 feet (4,572m) above sea level in the Andes, in 1994. It is situated beneath three massive glaciers “the ice melt from which provider the region with water for agriculture, industry and daily life”, the lead plaintiffs point out in a memorandum seen by RI. Quoting an earlier settlement in the Enron case, the investors argued for the settlement saying it would be “hard cash, a bird in the hand”. The case involved 2.2m pages of documents.

Separately, it’s been reported that investors led by the Jackson County Employees’ Retirement System are suing mining firm BHP Billiton over claims it made false statements about its commitment to safety in the wake of the tailings dam collapse in Brazil.