Gold mining company Atna Resources is seeking to restructure its debts and streamline its operations with the filing of Chapter 11 bankruptcy protection.
The Golden, Colo.-based company on Thursday said it had filed for protection in the U.S. Bankruptcy Court for the District of Colorado, and its indirect parent, Atna Canada, would also seek ancillary relief in the Supreme Court of British Columbia in Vancouver.
After defaulting on a loan and having just $200,000 in cash on hand, Atna said it intended to restructure its business by attempting to sell assets, resolving various challenges relating to Atna’s main assets, and seeking to modify its capital structure.
“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, [as well as] 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,” Atna’s president and chief executive James Hesketh said in a press release.
To fund its restructuring, the company 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.
Atna in July halted mining operations at Briggs, near Death Valley, Calif., in response to declining prices, according to The Wall Street Journal. It has laid off more than 100 employees, leaving 20 workers to handle continuing efforts to recover gold from remaining inventory. At the company’s Pinson mine in north-central Nevada, ore production has fallen 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 their restructuring, the debtors will be able to explore alternatives to strengthen the company, while addressing the challenges the debtors have faced.”