Ontario court dismisses appeal over mining project disclosure

The Court of Appeal for Ontario upheld a lower court ruling that found a mining company did not mislead investors by failing to disclose a geologist’s concerns about whether its project contained any gold.

The original ruling rejected a class action for secondary market misrepresentation against Pretium Resources Inc. on behalf of investors.

Earlier this year, Vancouver-based Pretium was acquired by Australia’s Newcrest Mining Ltd. in a deal valuing the company at US$2.8 billion.

In February 2021, Justice Edward Belobaba of the Superior Court of Justice dismissed an investor class action alleging that Pretium and its former CEO, Robert Quartermain, failed to disclose concerns outlined in a report by Strathcona Mineral Services Ltd. about a mining project in northwestern British Columbia.

According to the court, Strathcona resigned from the project after Pretium refused to publicly disclose its concerns. When the resignation was disclosed, the company’s stock price dropped sharply.

The lawsuit alleged that Pretium violated its continuing disclosure obligations by failing to disclose the contents of the report.

However, the lower court sided with the company, dismissing the action in a summary judgement and concluding that “Strathcona’s concerns” didn’t amount to material facts that had to be disclosed to investors.

“The Pretium defendants were under no obligation to disclose bad and misleading information. As such, there was no omission of any material fact,” the court said in its ruling.

The plaintiffs in the case appealed, seeking an order setting aside the lower court’s decision and ordering that a trial be held.

However, in a unanimous decision, the appeal court upheld the lower court’s ruling, finding that the plaintiffs failed to establish that the judge erred in dismissing the case.

“The motion judge’s decision was fact-driven and properly took into account the entire context in which the misrepresentations were alleged to have been made,” the appeal court said in its decision.

“His characterization of Strathcona’s opinions as inexpert, unsolicited, premature and unreliable was firmly anchored in the evidence,” the appeal court said, noting that the lower court judge concluded that the concerns weren’t reliable due to errors in sampling and the use of an “inappropriate” resource estimation technique.

“The motion judge’s conclusions reveal no reversible error: they reflect the application of the correct legal standard to a set of facts, based on a proper assessment of all of the evidence,” the appeal court added.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.