Allied Nevada Gold Corp. (OTCMKTS:ANVGQ) Performance Hurt By Lower Commodity Prices

Allied Nevada Gold Corp. (OTCMKTS:ANVGQ) that operates the Hycroft mine opted for bankruptcy protection after operational disappointments and plunged in commodity prices eroded profitability at its only working asset. The company stated that it owned assets worth $941 million and $664 million of debt as of December 31, 2014.

The measures

Allied Nevada made a deal with a specific group of bondholders who will support the company in bankruptcy financing. The funds will support the ongoing operations as the company moves forward with the restructuring process. The group has approved financing of $78 million. The financing is seen of great help as the company reported cash balance of close to $4.5 million in court filing.

The operational setbacks

The downfall in Allied Nevada started when the gold and silver prices declined from their peak levels. In 2011, when gold prices were trading at all time high levels, ANVGQ shares traded close to $45 per share. From that time, the share prices have declined by as much as 80%. The problems for the company aggravated when it faced operational setbacks at Hycroft mine. It is the sole asset of the company and any setback would have a direct impact on the company’s performance. The issue at Hycroft mine was the presence of a chalky substance that hindered production. Due to operational setback, the company was forced to lower its annual production guidance of silver and gold.

The pricing issues

Allied Nevada Gold Corp. (OTCMKTS:ANVGQ) performance was adversely affected by declining gold prices which dropped almost 28% in 2013. The year came as a shock for commodity companies and investors as it was first time in past thirteen years that yellow metal posted an annual decline. In 2014, gold posted loss of 1.4%. Due to the ongoing problems, the company was forced to generate cash in last December.

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