Loading ...San Gold shares halted as miner faces cash woes
The TSX said Tuesday shares of San Gold Corp. will be delisted by the end of February as the company continues to operate its gold mine in Bissett under creditor protection.
Late last week, a Manitoba court granted San Gold an extension to the middle of March to file a formal proposal to creditors and stakeholders.
Company management is optimistic its current production process puts it on a path toward operating profitably by March.
But the company — under protection of the Bankruptcy and Insolvency Act with Gord Neudorf of MNP acting as the proposal monitor — desperately needs to find new financing.
In the next few days, it is expected to retain financial advisers to run a sales and investor solicitation process (SISP) to find new investors, a joint venture partner or sell the company outright.
The company currently has a creditor list amounting to close to $95 million, including close to $30 million in secured debt to a New York financier called Beechwood Re, which is also subsidizing current operations. As well, there is $50 million in unsecured convertible debentures.
It has a plant and equipment with a book value of $64.8 million.
A formal creditor-claim process will take place when the company files its proposal plan. The initial notice of intention to file a proposal was made Dec. 22.
There has been a stay of proceedings on the company since then, and ongoing suppliers are being paid cash on delivery.
San Gold has booked close to $200 million in losses in the last two years. When a proposed merger with Kerr Mines Inc. — another small Canadian mining company — fell apart in mid-December, San Gold was out of cash and needed emergency funding from its secured creditor.
Company CEO Greg Gibson said in an interview Tuesday the whole creditor-protection process is designed to protect all the stakeholders.
“Now that everything is in place, and the loan has been approved by the court… we are now working as a company to save the shareholders and keep them in play… and try to protect unsecured creditors as best we can,” said Gibson.