A class action lawsuit has been filed against NovaGold Resources (NG-T) that claims the company issued false and misleading statements about the costs, progress and viability of its Galore Creek copper-gold development project in Northwestern British Columbia.
Galore Creek, which is 50%-owned by Teck Cominco (TCK-T, TCK-N), was put on hold in November 2007 when it was revealed that cost estimates had more than doubled to $5 billion.
The plaintiff is seeking damages for people who were investors between Oct. 25, 2006, when a positive feasibility study on Galore Creek was released, and Nov. 23, 2007.
On Nov. 26, 2007 NovaGold shares went into a tailspin, falling 53% to $9.48 per share on news that an updated feasibility put development costs 127% higher than the study from a year earlier.
The lawsuit was filed in the United States District Court for the Southern District of New York.
According to a statement issued by the plaintiff’s lawfirm Schiffrin Barroway Topaz & Kessler, LLP., NovaGold and certain officers and directors have been charged with violations of the various securities regulations.
NovaGold issued a statement saying it believes it has “substantial and meritorious legal and factual defenses,” and will dispute the claim.
NovaGold shares fell 5.5%, or 41 today to $7.03 on a trading volume of 526,000.
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