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Novagold shareholders sue over disclosure issue

Last Updated: Wednesday, October 14, 2009 | 4:10 PM ET

CBC News

Canadian shareholders of NovaGold are suing the company, claiming it misrepresented the true cost of its now-stalled Galore Creek copper-gold mine in British Columbia, their lawyer announced Wednesday.

The suit claims damages of $100 million on behalf of all Canadian investors who bought shares from Oct. 25, 2006, to Jan. 16, 2008. It is similar to one launched in the U.S.

Besides the company, defendants include the consulting firm that estimated in 2006 that the mine could be built for about $1.8 billion US and several individuals including NovaGold's CEO and directors at the time.

"Such claims allowed NovaGold to raise hundreds of millions of dollars in the capital markets," law firm Sutts, Strosberg LLP said in announcing the suit.

Novagold said on Oct. 17, 2007, that it expected a "significant" increase to the estimated capital cost of Galore Creek. The following month the project was halted when a review found the project could cost up to $5 billion.

With files from Canadian Press
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