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NovaGold Resources, Inc. Summary: According to a press release dated August 7, 2008, the Complaint charges NovaGold and certain of its officers and directors with violations of the Securities Act of 1933 and Securities Exchange Act of 1934. NovaGold is engaged in the business of exploration and development of mineral properties. Throughout the Class Period, Defendants falsely portrayed NovaGold as a rapidly growing company on the verge of moving from a mid-tier exploration and development company to a mid-tier gold and copper production company by issuing a series of materially false and misleading statements regarding the costs, progress and viability of its multi-billion dollar Galore Creek project.
Specifically, the complaint alleges that the Class Period begins on October 25, 2006, when NovaGold issued a press release touting the results of a feasibility study performed by Hatch Ltd. ("Hatch") that purportedly "confirmed" the economic viability of the Galore Creek project. According to a statement made by the Company's President and CEO, Rick Van Nieuwenhuyse ("Nieuwenhuyse"), in the October 25, 2006 press release, "the Feasibility Study confirms that Galore Creek is one of the world's largest undeveloped copper-gold-silver projects with one of the lowest cash costs in the industry ...." The Feasibility Study estimated the capital costs for the Galore Creek project to be Cdn $2.2 billion. The Hatch Feasibility Study enabled the Company to successfully fend off a hostile takeover bid by mining giant Barrick Gold by maintaining the average closing price of the Company's shares above Barrick Gold's $16 per share tender offer. In fact, when fending off Barrick Gold's takeover bid Nieuwenhuyse assured shareholders "that at US$16, NovaGold shares are better than money in the bank." The Hatch Feasibility Study also allowed the Company to raise hundreds of millions of dollars in an April 2007 secondary stock offering, thus providing a strong motive for the Defendants to misrepresent the Hatch Feasibility Study as a bankable study. Throughout the Class Period, the Company regularly and systematically assured the investing public that the construction of the Galore Creek project was on schedule and on budget.
On November 26, 2007, the Company shocked investors when it announced that it would suspend activities at Galore Creek based on the results of an updated feasibility study, which estimated the capital costs for the Galore Creek project to be Cdn $5 billion -- approximately 127 percent greater than Hatch had estimated in October 2006. Upon the release of this news, the Company's shares declined $10.76 per share, or more than 53 percent, to close on November 26, 2007 at $9.48 per share, on unusually heavy trading volume.
INDUSTRY CLASSIFICATION:
SIC Code: 1040
Sector: Basic Materials
Industry: Gold & Silver
| COMPANY/ISSUER NAME: | NovaGold Resources, Inc. |
| COMPANY/ISSUER TICKER: | NG |
| COMPANY WEBSITE: | http://www.novagold.net |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Rudolph T. Textor, et al. v. NovaGold Resources, Inc., et al. | |||||||||||||||||
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| DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT | |||
| Class Action Complaint for Violations of the Federal Securities Laws - Jury Trial Demanded | |||
| Type: Complaint | Date on the document: 8/7/2008 | ||
| U.S. District Court Civil Docket | |||
| Type: Docket | Date on the document: 8/8/2008 | ||
| OTHER DOCUMENTS | |||
| Case Name and/or Number: | |||
| Type: | Date on the document: | ||
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