Photo by: Duane Daws
TORONTO (miningweekly.com) – TSX-listed Veris Gold on Monday said a British Columbia court had extended an order to the end of the month protecting the company and its subsidiaries under the Companies' Creditors Arrangement Act (CCAA) from creditors, pending a reorganisation.
The company has been operating under the protection of the CCAA since June 9, when the Supreme Court of British Columbia issued an order granting the company creditor protection, after Deutsche Bank (DB) London Branch declared payment defaults under the two forward gold purchase agreements between DB and the company.
The initial order appointed professional services firm EY as monitor of the companies under CCAA protection.
Veris had also been granted a temporary restraining order from the US Bankruptcy Court, which would shield its assets from the company’s creditors until a full hearing of an application for recognition of the CCAA proceedings under Chapter 15 of the US Bankruptcy Code had taken place.
At the next court hearing, Veris expected to seek court orders sanctioning it to prioritise claims against the company, approve the sale of redundant assets and to seek a further extension to the stay period, aligned with certain major milestone dates.
Meanwhile, Veris late in June said preproduction had started at the Saval 4 underground mine, which was part of the Jerritt Canyon operations, in Elko County, Nevada. Saval 4 will be the fourth underground mine to come into production at Jerritt Canyon since 2010. Development at the Saval 4 mine started in the third quarter of last year and the portal was completed on May 28.
The scheduled mining rate is between 250 t/d and 350 t/d, grading about 0.16 oz/t, with estimated yearly production between 9 800 oz and 13 720 oz.
Based on achieving these run-rate targets, the company expected to declare commercial production in early August.
Veris was forced to start CCAA proceedings after the company failed to complete restructuring or refinancing efforts.
Veris had sought protection to address near-term liquidity issues owing to a decreasing gold price, higher than expected production costs, demands for payment under existing loan agreements and unexpected shutdowns, including the January shutdown owing to a December fire.
The company’s Jerritt Canyon operation would continue to produce gold during these proceedings and was cash-flow positive.
The TSX-listed stock of the North American miner lost more than half its value in January, when the miner first revealed that it had defaulted on the two forward gold purchase contracts. The midtier company said it had failed to make the monthly December gold delivery, or pay the cash equivalent of the gold delivery shortfall.
This was the result of an electrical accident, resulting in a fire that occurred in the primary crushing building at the Jerritt Canyon mill operations. The fire resulted in a temporary suspension of operations, which negatively affected output during December.
Veris said the forward gold purchase contracts with DB did not contain a force majeure provision that would have allowed Veris to temporarily suspend its obligations under the contracts owing to circumstances beyond its control.
Veris’ TSX-listed stock was last month suspended from trading pending a delisting review regarding the company meeting the continued listing requirements for its common shares and purchase warrants.