Atna Resources Files for Chapter 11 Bankruptcy Protection
Mining company seeks court permission to tap a $4 million financing package
Gold mining company Atna Resources Ltd. filed for chapter 11 bankruptcy protection Wednesday with the goal of streamlining its operations and restructuring its debts.
The Golden, Colo., company said it is in default of its existing loan and faces severe liquidity constraints, having just $200,000 in cash on hand as of this week.
“The low gold prices in 2015, the continued indifference in the market for gold company equities, a lack of capital in the mining sector, a lack of development capital and operating issues resulting in a significant shortfall in third-quarter gold production at the Pinson mine, and a depressed market for the sale of idled mining equipment all negatively impacted the company’s outlook and led to the company’s current liquidity problems,” James Hesketh, Atna’s president and chief executive, said in a news release.
To fund its restructuring, it is seeking court permission to tap a $4 million financing package from its existing lenders. The lenders, led by an affiliate of Waterton Global Resource Management, are owed approximately $19 million in principal as of the date of Atna’s chapter 11 filing.
“Absent this relief, the debtors will likely need to cease operations, which will have a disastrous impact on the value of their business and their ability to maximize value,” the company said in court papers.
The company’s restructuring strategy, which comes as gold prices have fallen substantially over the past several years, includes trying to sell core and noncore assets while tackling challenges at mines in California and Nevada.
The company until recently has relied on these mines—Briggs, near Death Valley, Calif., and Pinson, in north-central Nevada—as its primary cash generators.
The company halted mining operations at Briggs in July in response to declining prices. It has laid off more than 100 employees, leaving 20 workers to handle continuing efforts to recover gold from remaining inventory.
The Pinson mine saw increased mining operations in the first half of this year, but ore production fell short in recent months because of development delays.
“The debtors believe that additional time and resources are necessary to successfully maximize value at the mines,” Atna said in court papers. “In their restructuring, the debtors will be able to explore alternatives to strengthen the company, while addressing the challenges the debtors have faced.”
In addition to the chapter 11 filing in the U.S. Bankruptcy Court in Colorado, Atna’s indirect parent, Atna Canada, has also sought protection from creditors in Canada.
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