As expected in this textbook case of miscalculations, Aurcana Silver (TSXV: AUN) just lost its flagship Revenue-Virginius mine as a result of a court decision related to its term loan with Mercuria Energy Group.
“On July 7, 2022, the District Court for Ouray County, Colorado appointed Alliance Management, Inc. as Receiver for the [Revenue-Virginius] Mine,” the company said in its statement.
The Colorado property was subject to a mortgage agreement related to a 5-year, $28 million term loan with Mercuria. The initial principal payment was supposed to be scheduled for March 2022 but the parties agreed to a standstill agreement, giving Aurcana Silver time to raise an additional US$25 million in liquidity.
Read: What’s Going On With Aurcana Silver?
Despite multiple postponements, the company still failed to come up with the liquidity required. To make matters worse, the firm saw its two largest shareholders step down from the board in a move that did not help with its confidence to raise the necessary funds.
Finally, Mercuria has had enough of the extensions and marked July 1, 2022, as the last one. With Aurcana Silver still failing to meet its obligations, legal actions were sought to secure the mortgaged asset.
The court appointed Alliance Management, Inc. to handle Revenue-Virginius mine from the previous owner, Aurcana Silver subsidiary Ouray Silver Mining. The transfer also effectively puts a stay on “all civil legal proceedings against Ouray Silver Mine Inc. and the RV Mine, including all arbitration proceedings and foreclosure actions.”
In the latest feasibility study for the Revenue-Virginius silver mine effective December 31, 2021, the property has an NPV5% of US$108.8 million. Total production is estimated at 17.7 million payable silver equivalent ounces (including approximately 13 million payable ounces of silver) over the approximately 6.25-year mine life.
Aurcana Silver last traded at $0.03 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
