Uptick in Filings in Precious Metal Mining Sector
In his Bankruptcy Update, Edward E. Neiger discusses precious metal mining bankruptcies, which saw a significant uptick in filings recently as gold prices suffered a substantial drop over the last few years, capital access in the sector decreased and the market for idled mining equipment declined.
November 27, 2015 at 07:12 PM
6 minute read
This article focuses on precious metal mining bankruptcies, including the recent chapter 11 filings of Atna Resources Ltd., Santa Fe Gold Corp., Midway Gold Corp. and Allied Nevada Gold Corp. The sector saw a significant uptick in bankruptcy filings as gold prices suffered a substantial drop over the last few years, capital access in the sector decreased and the market for idled mining equipment declined.
Mining and Gold Prices
On Nov, 19, 2015, Atna Resources Ltd. and affiliated debtors filed petitions for relief under chapter 11 in the U.S. Bankruptcy Court for the District of Colorado.
The debtors attributed their restructuring needs to a recent default on a $22 million prepetition loan, unfavorable equity markets for gold mining and liquidity constraints. The debtors' available cash dissipated from $2.2 million on Dec. 31, 2014, to $200,000 by Nov. 17, 2015. Indirect parent company Atna Canada simultaneously sought bankruptcy relief in Canada under the Companies' Creditors Arrangement Act.
The debtors own and operate mining facilities in California and Nevada. They also own mining resources and rights in Montana, Wyoming, Yukon and British Columbia. The debtors reported that they significantly scaled back operations and reduced work forces at the mines last year as gold prices reached a six-year low.
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