|The Hycroft gold-silver mine in Nevada is Allied Nevada's flagship asset. The company recently filed for Chapter 11 bankruptcy relief. (Photo courtesy of Allied Nevada)|
Allied Nevada filed voluntary petitions on March 10 for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company’s announcement stated that the filing was based on an agreement with certain holders of its 8.75% senior unsecured notes due in 2019 and its secured bank lenders to effect a reduction in the company’s funded debt obligations and provide it with additional liquidity.
Allied Nevada operates the Hycroft open-pit, heap-leach gold mine 54 km west of Winnemucca, Nevada. Production during 2014 totaled about 214,000 oz of gold and 1.2 million oz of silver. The company had been anticipating that its 2015 production would be similar to that of 2014.
The bankruptcy announcement stated that Allied Nevada will continue to operate its business as a “debtor in possession” under the jurisdiction of the bankruptcy court. Under the proposed financial restructuring, which requires bankruptcy court approval, Allied Nevada expects its trade creditors and vendors to be paid in full.
The company and the supporting noteholders also agreed on a $78 million debtor in possession secured credit facility. The company plans to use this financing to maintain business-as-usual operations during the restructuring process. The company believes its current and anticipated cash resources will be sufficient to pay its expenses and maintain its business operations during the pendency of its Chapter 11 cases.
Allied Nevada had been studying an expansion of production at Hycroft based on processing the property’s sulphide ores. The sulphide mill was to be constructed in two phases of 60,000 st/d each. As of late November 2014, capital expenditures to construct the first mill line had been estimated at about $768 million.