July 7, 1997
Back to July calendar
Back to archive page
Wednesday, July 9, 1997Shareholders sue Kensington parent company over stock prices
Last modified at 3:38 p.m. on Wednesday, July 9, 1997
By LORI THOMSON
THE JUNEAU EMPIRE
Shareholders have filed a class-action lawsuit against the company that plans to reopen the Kensington gold mine, claiming it misrepresented its finances to inflate its securities and stock prices.
Coeur d'Alene Mines Corp. officials called the suit ``baseless,'' and analysts said it's too early to tell whether the suit will have any impact on plans for the Kensington gold mine, about 45 miles north of Juneau.
``You never know who's going to win,'' said Todd Hinrichs, a mining analyst for the securities firm ABN-AMRO in Chicago. ``We'll know when the lawsuit goes further.''
Coeur officials said they will fight the lawsuit.
``We regard it as baseless and without merit and will defend it vigorously,'' said Mitchell Krebs, Coeur's manager of investor relations and new business development at the company's headquarters in Coeur d'Alene, Idaho.
The suit was filed at the beginning of the month in the U.S. District Court for the District of Colorado. The complaint alleges Coeur misrepresented its finances by saying it reduced losses in 1994, was increasing its assets, was operating its Golden Cross mine in New Zealand at lower costs than in past years and was completing its new Fachinal mine in Chile on time and under budget.
According to the complaint, the statements caused Coeur's stock to rise from $14.50 per share in January 1995 to $25.75 in July 1996.
In July 1996, Coeur announced it was writing off its $53-million investment in Golden Cross because of the cost of stabilizing a dam to hold mine tailings. The company also announced the Fachinal mine lost $7 million through 1996, according to the complaint.
Coeur experienced more than $54 million in losses in 1996 and stock prices plunged 45 percent.
State mining specialist Al Clough said the lawsuit was too new to determine its impact on the company, but he questioned the grounds of the case.
``It sounded like somebody was P.O.-ed because their stock went down a little bit,'' Clough said. ``The tenet of the class-action suit was there's supposed to be a guarantee of making money. If I could do that, I'd be in the investment market in a minute.''
Mining companies are required by law to divulge changes in their mineral base. Clough said although he had no idea how long Coeur officials may have known about problems at Golden Cross, they appeared to announce their decision to write off the mine immediately, in accordance with the law.
Gershon Cohen of the Haines-based Alaska Clean Water Alliance said the suit, along with falling gold prices, makes him question whether Coeur will open the Kensington mine.
Cohen, a critic of the mine, said the suit reinforces his belief Coeur painted an overly rosy picture of its operations to push its project through. He pointed to Coeur's schedule for opening the mine, which repeatedly has not been met, its projected number of local jobs, which he questions, and problems with the New Zealand dam as examples.
``We feel they have been overly optimistic on many occasions,'' Cohen said.
Shareholders' attorneys from the law firm Milberg Weiss Bershad Hynes & Lerach LLP would not comment on the case. The suit is being handled by the firm's San Diego office.
According to mining analyst Hinrichs, such lawsuits are not unusual for many smaller mining companies, but are less common among major players such as Coeur.
``I was somewhat surprised by it,'' Hinrichs said. ``Just a little bit, but not a lot.''
Copyright © 1996, 1997 Southeastern Newspaper Corp.
Comments or questions? Contact the Webmaster.
© 2017. All Rights Reserved. | Contact Us