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The lawsuit says that "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 $5 billion-approximately 127 percent greater than Hatch had estimated in October 2006."

"The announcement caught the market completely by surprise," the plaintiffs declared. "As stated by Citigroup metals analysts John Hill and Graham Wark, ‘the magnitude of underestimation is shocking to us...' and by Dorothy Kosich, ‘Citigroup calls for NovaGold sale after Galore Creek ‘mining disaster,' Mineweb, November 30, 2007. The company's shares have not recovered and continue to trade under $10 per share."

"The complaint alleges that, throughout the Class Period, Defendants failed to disclose materially adverse facts about the company's operations and prospects. Specifically, Defendants failed to disclose that:

(1)     Contrary to the Defendants' representations, the Company had failed to make reasonable estimates as to capital expenditures necessary to mine Galore Creek, which were underestimated by more than $3 billion.

(2)     The development of Galore Creek was not proceeding on schedule and was a year and a half to two years behind schedule; 

(3)     The results of the Hatch Feasibility Study announced on October 25, 2006 materially understated the capital costs and construction schedule required to successfully mine the Galore Creek site;

(4)     Defendants knew but failed to disclose that the Hatch Feasibility Study was not a ‘Bankable Feasibility Study.' 

(5)     NovaGold used its Hatch feasibility Study as a marketing tool to fend off Barrick Gold's takeover bid and to artificially support its stock price when Defendants knew or were reckless in disregarding that the Hatch Feasibility Study failed to: (i) use reasonable discount rate assumptions that reflected the Company's true cost of capital; (ii) evaluate and discount the major risks associated with development of the Galore Creek project; and (iii) failed to use realistic timeliness for permitting and construction of the project;

(6)     The Company lacked adequate internal controls; 

(7)     As a result of the foregoing, the Company's disclosures in, inter alia, its SEC filings were materially false and misleading at all relevant times; and