intended to be located. The greatest share of the expense related to the Lama side of the project.
The project was 45,000 hectares in size, or roughly two-thirds the size of the city of Toronto.
The project presented significant engineering, environmental, and regulatory challenges.
George Potter, who held the position of Barrick’s Senior Vice President, Capital Projects during
the early stages of the project, described some of the complexities in his evidence. For example,
being located in the high Andes, the terrain was rugged, the climate was arid, the winter was
cold, and strong winds blew during all seasons. Due to its remote location, workers, construction
materials, and equipment all had to be transported to the project by road in both Chile and
Argentina. The project was not connected to power grids in either country, so electrical
substations and transmission lines had to be constructed. Camps had to be built to house the
The bi-national nature of the project gave rise to complications, requiring Barrick to deal
with different governments and governmental agencies at multiple levels in both Chile and
Argentina. The project had to contend with tax regimes, legal and regulatory systems, and
economic conditions in both countries.
The challenges inherent in the project became further complicated by events that
occurred while the project was ongoing, including rampant inflationary pressures, a serious
earthquake in Chile, and a superboom in construction projects worldwide, across industries,
which resulted in an increase in cost and decrease in supply of commodities and labour. In
addition, the project was eventually placed on hold after an injunction issued by a Chilean court
due to environmental concerns. Ultimately, the project was placed on care and maintenance
before completion, the company having concluded that it was no longer financially viable.
Throughout the project’s currency, Barrick made a series of disclosures about its progress
in its quarterly and annual reports and in press releases. The plaintiffs allege that Barrick made
several misrepresentations in these disclosures. First, they allege that Barrick disclosed
misleading forecasts of the project’s capital expenditure (“capex”) budget and of the project’s
schedule. They also argue that Barrick both implicitly and explicitly represented that its forecasts
were based on assumptions considered reasonable by the company at the time they were made,
but that these representations were untrue. They allege that Barrick knew that its forecasts were
not based on reasonable assumptions when the forecasts were disclosed.
The plaintiffs also argue that Barrick made misrepresentations in its accounting
documents. In particular, they allege that Barrick should have taken an impairment related to the
project before it did, and because it failed to do so, its financial statements overstated the value
of its assets and understated its expenses, thereby overstating its income. They also allege that
Barrick failed to disclose that there were material weaknesses in its disclosure controls and
procedures (“DC&P”) and in its internal controls over financial reporting (“ICFR”). Finally, they
allege that Barrick misrepresented that it had no undisclosed contingent liabilities relating to the
project, when it did, in the form of contingent liabilities alleged to have arisen as a result of what
the plaintiffs claim are the project’s serious environmental violations in Chile.