NovaGold Resources Inc (AMEX: NG) Investor Securities Class Action Lawsuit 08/07/2008

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Company Name(s): 
NovaGold Resources
Case Name: 
NovaGold Resources Shareholder Class Action Lawsuit 08/07/2008
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
AMEX: NG
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
08/07/2008
Class Period Begin: 
10/25/2006
Class Period End: 
11/23/2007
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
10/06/2008
Date Settled: 
09/10/2010
Settlement Amount: 
$26,600,000
Deadline to Participate in Settlement: 
09/15/2010
Summary: 

September 10, 2010 - The court approved the settlement entered the orders approving the plan of allocation, the motion for attorneys' fees and expenses and dismissed the action with prejudice.

May 10, 2010 - The court preliminarily approved the settlement.

April 20, 2010 - Parties filed stipulation of settlement.

February 16, 2010 - NovaGold Resources Inc (NYSE: AMEX, TSX: NG) announced that it has entered into a memorandum of understanding to settle outstanding securities class action lawsuits in both the U.S. and Canada, in which NovaGold Resources Inc and certain of its directors and officers were named as defendants for C$28 million (approximately US$26.6 million). The settlement will be covered by NovaGold Resources Inc's insurance, and NovaGold Resources Inc does not anticipate having to pay out any of its cash under the terms of the settlement. The memorandum of understanding is subject to agreement in formal documentation with both U.S. and Canadian court approval after public notice. The U.S. Action alleges that between October 25, 2006 and November 23, 2007 defendant issued materially false and misleading statements regarding NovaGold Resources Inc’s business and financial results. In the Canadian Actions, Canadian Plaintiffs alleged a different class period based on similar allegations, between October 25, 2005 and January 16, 2008.

Rick Van Nieuwenhuyse, President and CEO of NovaGold said, "We are pleased to have settled these proceedings. While we believe we ultimately would have been successful in defending the allegations, this settlement allows us to focus 100% of our attention on executing our business plan: advancing our world-class properties to production and growing our company by exploring and developing new opportunities.”

June 5, 2009 - The court granted in part and denied in part the defendants' motion to dismiss.

January 23, 2009 - Defendants filed motion to dismiss.

December 30, 2008 - The lead plaintiff filed a corrected second amended consolidated complaint.

December 22, 2008 - The lead plaintiff filed an amended consolidated complaint.

November 5, 2008 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

October 6, 2008 - Lead plaintiff motions were filed.

August 7, 2008 - An investor in shares of NovaGold Resources Inc (AMEX: NG) filed a lawsuit in the U.S. District Court for the Southern District of New York against NovaGold Resources Inc over alleged violations of Federal Securities Laws.

According to the complaint the plaintiff charges NovaGold Resources Inc and certain of its officers and directors with violations of the Securities Exchange Act of 1934 and Securities Act of 1933. The U.S. complaint alleges that between October 25, 2006 and November 23, 2007 defendant issued materially false and misleading statements regarding NovaGold Resources Inc’s business and financial results.

Throughout the Class Period, Defendants falsely portrayed NovaGold Resources Inc 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 Resources Inc 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 NovaGold Resources Inc’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 C$2.2 billion. The Hatch Feasibility Study enabled NovaGold Resources Inc to successfully fend off a hostile takeover bid by mining giant Barrick Gold by maintaining the average closing price of the NovaGold Resources Inc’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 NovaGold Resources Inc 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, NovaGold Resources Inc 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, NovaGold Resources Inc 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 C$5 billion - approximately 127 percent greater than Hatch had estimated in October 2006. Upon the release of this news, NovaGold Resources Inc’s (AMEX: NG) 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.

NovaGold Resources Inc is engaged in the business of exploration and development of mineral properties.