Paul, Weiss, Rifkind, Wharton & Garrison achieved another victory for Pretium Resources Inc. and two executives.
Pretium Resources Inc. and two executives achieved another victory when the U.S. District Court for the Southern District of New York denied plaintiffs’ motion for leave to amend their complaint following dismissal of a securities class action alleging that Pretium had defrauded investors.
Pretium, a gold-mining company based in Western Canada, operates the Brucejack Mine, a high-grade underground gold mine in northwestern British Columbia. Investors sued Pretium after it announced in April 2019 that it was reducing its estimate of the grade of its gold in its proven reserves substantially.
On February 27, the district court dismissed the initial complaint, while allowing the plaintiffs to amend. In their original complaint, they had alleged that Pretium misled investors over a two-year period about the development of the Brucejack Mine in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and that Pretium did not disclose to the SEC that the company was excavating more waste rock than originally estimated, and thus had secretly abandoned its original mining plan. In the dismissal, the court held that the alleged misstatements were statements of opinion under the Supreme Court’s decision in Omnicare, and thus not actionable, and that plaintiffs failed to plead scienter.
A month later, the plaintiffs sought leave to amend their complaint to address the deficiencies the court had identified. This time, they alleged that Pretium’s estimates were misleading because the company had purportedly withheld for several months data on the grade of ore that its mining efforts were producing, and even then, disclosed data only on the grade of ore that it was actually processing, rather than on all of the rock being excavated.
Pretium argued that the proposed amendments were futile, and the court agreed. In a 10-page order, the court found that the plaintiffs’ contention that Pretium failed to disclose the grade of any ore it had mined until January 2018 was incorrect, and that in fact, Pretium had been regularly disclosing the grade of the ore it was mining since August 2017, right after the mine began commercial production. The court also ruled that the plaintiffs still didn’t meet the bar set by Omnicare and still failed to plead facts supporting a strong inference of scienter.
The Paul, Weiss team included litigation partners Daniel Kramer (Picture) and William Michael and counsel Robert Kravitz.
Law Firms: Paul Weiss Rifkind Wharton & Garrison;
Clients: Pretium Resources;