The inevitable finally happened this morning when Pure Gold Mining (TSXV: PGM) announced that it has filed for creditor protection, after struggling to make its mine profitable after a tumultuous year for its operations. The development follows the news last week that the company was forced to suspend operations at its mine due to cash constraints.
The filing comes despite the company raising proceeds of $31.2 million in February via a bought deal that saw AngloGold Ashanti increase its stake to 9.9%, and a further $31.1 million that was raised in May that saw Tony Makuch join the team as a technical advisor.
The decision to file reportedly follows “careful consideration” of the firms cash position, required debt payments, and expected revenues and expenses, along with any potential alternatives to such a filing. The initial order, which will be filed under the Companies Creditors Arrangement Act of Canada via the Supreme Court of British Columbia, will seek a stay of credit claims and proceedings, the appointment of KSV restructuring as monitor, and authorization for the company to borrow funds from Sprott Private Resource Lending II via an interim financing credit facility.
The Pure Gold Mine meanwhile is expected to remain in care and maintenance once the initial order is granted, while management will remain responsible for the day to day operations of the the company.
Pure Gold Mining last traded at $0.02 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.
