Officials at Australia’s Newcrest Mining are facing a potential class action lawsuit by shareholders over alleged breaches of continuous disclosure laws involving the timing of last week’s announcement of a $6 billion write-down. Friday’s downgrade revealed Australia’s top gold miner would break even in 2014 after spending $1 billion on capital costs. More than half of the write-downs of up to $5.7 billion, according to company officials, were associated with Newcrest’s troubled Lihir gold mine in Papua New Guinea.
Andrew Watson, an attorney with Maurice Blackburn, told The Australian that the “nature and extent of the write-downs raises real issues—it beggars belief Newcrest knew nothing of the catastrophic impact the gold price slump would have on its assets until the day it announced the write-down.”
The challenge coincides with a bid by Newcrest to deflect criticism of its handling of last week’s production and profit downgrade by telling Australian Stock Exchange (ASX) officials that the company immediately announced the price-sensitive information after a board meeting that same day. Newcrest insisted the sensitive information was learned at “the conclusion of the board’s annual business plan review and budget approval process on the morning of Friday,” company officials said in a statement.
A series of downgrades preceded Friday’s announcement, plunging Newcrest shares into a nosedive, prompting allegations of secret meetings. But “the review and approval process concluded at a meeting of Newcrest’s board executive committee held at that time. Following this, Newcrest made the announcement promptly and without delay,” the company added.
Newcrest officials added that they treat disclosure obligations “seriously” and engage “with the investment community consistent with these obligations. Newcrest will continue to cooperate fully with the ASX.” Further ASX concerns could prompt an investigation by officials at the Australian Securities and Investments Commission.