Aurcana Silver Sees Lender Move To Secure Flagship Asset
Aurcana Silver Corp (TSXV: AUN) is one of the biggest movers of the day, trading down as much as 66% to just $0.02 per share, following the late Thursday night news before the Canada Day long weekend that debt extensions would no longer be provided by its lender, Mercuria Energy Group.
The company owes Mercuria funds under a $28 million term loan arrangement that was entered into in early December 2020. The debt was to be used to fund the restart of the Revenue-Virginius mine, which is more commonly referred to as the RV Mine.
A loan standstill was announced just three months later.
The standstill, by all accounts, appears to be in relation to the need for more capital. As part of the standstill, Aurcana was to source US$25 million in additional liquidity. That liquidity never showed up.
With liquidity failing to materialize for the company, Mercuria has grown tired of providing extension to the standstill arrangement, and as of July 1 is no longer providing such extensions. Instead, the firm is filing a Motion For Appointment of a Receiver, which will be filed in Colorado. Specifically, the company is looking for the court to appoint a receive for the RV Mine, the flagship asset of Aurcana Silver.
The RV Mine was used as security under the $28 million loan provided to Aurcana.
The development follows two directors leaving the firms board as of June 23, in an apparent sign of what was to come for the company.
Aurcana Silver last traded at $0.03 on the TSX Venture.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
Is there any hope left? A mine in production which was to generate 50M. of cash flow in its first year of production seems to me to be worth a lot more than its debt to Mercuria. I doubt that such a mine with its exceptional contents does not interest anyone! For us poor shareholders, would a takeover of Aurcana or a participation in its capital be preferable to a sale of the mine, is an operation of Virginius by Aurcana still possible or conceivable?