On December 8 and 9, 2021, the Cassels Securities Litigators represented the Defendants Lundin Mining Corporation and certain of its directors and officers in the Ontario Superior Court of Justice to oppose a motion for leave to proceed with secondary market misrepresentation claims pursuant to the Securities Act (Ontario) and a motion for certification of a proposed class action. The proposed representative plaintiff, on behalf of the proposed class, sought general and special damages in the amount of $175 million and punitive damages in the amount of $10 million. On January 6, 2022, the Court found in favour of the Defendants and dismissed both motions in their entirety.
At issue was whether (i) a pit wall instability on October 25, 2017 and (ii) a subsequent rock slide of approximately 600,000 to 700,000 tonnes of waste material on October 31, 2017 at Lundin Mining’s Candelaria open pit mine were material changes requiring immediate disclosure under the Securities Act. The pit wall instability and rock slide were disclosed by Lundin Mining in the ordinary course on November 29, 2017. The following day, November 30, 2017, the price of Lundin Mining’s common shares trading on the TSX declined by 16%, representing a one-day loss of over $1 billion of market capitalization.
The Cassels Securities Litigators argued that the class would not be able to establish at trial that either the pit wall instability or the rock slide constituted a “material change” within the meaning of the legislation because, among other things, those events did not raise a threat to Lundin Mining’s economic viability, they were inherent risks in an open pit mining operation, and after the events, Lundin Mining remained engaged in the same operations at the Candelaria mine. The Court accepted these arguments, finding that Lundin Mining was at all times “able to continue its business, operations, and capital as a worldwide mining corporation,” noting that “the court cannot ‘reason backwards’ from a share price decline to find that there was a change in business.” On that basis, in dismissing the motions, the court held that “there was no reasonable possibility of success” that the class could establish the material changes alleged at trial. The decision can be found here.
The Defendants were represented by Cassels.