CCAA court documents show mine supply and service companies owed $16 million
With only a $260,000 cash balance at the end, insolvent Pure Gold Mining has started the process of finding a new buyer or deep-pocketed investor for its Red Lake mine and mill operation.
Facing an “imminent” cash crisis, unable to raise any outside financing, and plagued by “operational challenges,” the Vancouver mining company called a halt to operations Oct. 24 and was granted creditor protection by the B.C. Supreme Court under the Companies’ Creditor Arrangement Act on Oct. 31.
Seeking shelter under CCAA protection gives Pure Gold some necessary “breathing room” for management to huddle with its primary lender, Sprott Private Resource Lending, its advisors, and KSV Restructuring, the court-appointed monitor, to continue on with a strategic review process that the mining company started last July. Among the options being considered last summer was a partial or outright sale of the mine.
It allows Sprott to provide interim financing to maintain the operation during the temporary shutdown. The monthly care and maintenance bill amounts to $1.8 million. Factor in the accountants and lawyers and it will cost $3 million to $4 million a month to cover the cost of these CCAA proceedings.