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Allied Nevada Gold Corp. (OTCMKTS:ANVGQ) Has It Finally Reached its End?

Allied Nevada Gold Corp. (OTCMKTS:ANVGQ) ironically a gold mining firm has filed for bankruptcy protection on March 10, 2015, along with 13 of its affiliates. The petition lists $941.2 million in total assets while the total debts stood at $663.7 million. The reasons filed for the petition included:

  • Decreasing prices of gold and silver.
  • An overlarge capital structure.
  • Exposure under cross-currency swaps.
  • Delay in the Hycroft Mill Expansion project, due to capital requirements.

Currently, the company has reached an agreement with some of its bondholders on a $78 million deal of debtor in possession facility. The company hopes that this would be enough for it to restructure its debts. The company had experienced its peak in 2011, when its stock traded for $45 each, yet it closed at 86 cents on the 9th of March 2015.

The Nevada-based Corporation has been on the path of constant decline since 2013. The first blow came from the plunging gold and silver prices, which stood at a whopping 28%, the first decline after 13 years. It fell a further 1.4% in 2014. With just $1.3 million remaining by the end of November, the company took to selling stock at $1 each, with warrants to raise $21.5 million by the end of December. The debts kept climbing to reach $568 million by the start of December 2014, apart from a loan of $48 million.

The company had planned an expansion of its Hycroft mill to increase production, but it does not have the much needed $1.4 billion for it. Additionally, the company suffered more setbacks, when recently a chalky substance slowed production at hycroft. Even after so many blows, the company administration is determined to move forward. The administration has recently hired Credit Suisse group and the Bank of Nova Scotia, to advice on financing the mill. If the move is a success, the corporation just might have a good chance to get back on its feet. If it fails to reach the designated targets, the shareholders would have a lot to worry about.

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