A class action lawsuit launched by a B.C. investor is claiming $3.5 billion in damages against Kinross Gold Corp. (TSX: K) for allegedly making misleading claims about a gold mining project in West Africa.
In a suit filed by the Merchant Law Group in BC Supreme Court last week, a numbered company in Surrey (0116064 B.C. Ltd.) claims several Kinross executives made misleading statements about the company's Tasiast gold mine in Mauritania that eventually resulted in the company's stock dropping 22%, from $13.20 per share on January 16, 2012, to $10.39 a day later.
The application is being made by Curtis Hamilton of Penticton on behalf of all investors who bought Kinross shares between February 16, 2011, and January 16, 2012. It has not yet been approved, and none of the allegations made in the application have been proven in court.
The suit centres on the Tasiast gold mine, which Kinross – based in Toronto – acquired when it bought Vancouver-based Red Back Mining Inc. for US$7.1 billion in 2010.
According to the class action application, Kinross issued a press release on January 16, 2012, that, among other things, revealed drill results that showed high amounts of low-grade ores, which the plaintiff claims were contrary to previous assertions that the gold grades were "higher than expected."
It also claims the company filed financial statements and internal disclosure controls that were "materially false and misleading" and intended to increase its stock value.
In February, Kinross announced a net loss of $2 billion.
