Chinese men accused of running illegal gold mine in Congo
Around 60 Chinese nationals were at the site and officials detained 17 who appeared to be in charge.
Cash-starved and in debt, Colossus Minerals is hoping to stay afloat with creditor protection after it failed to make an interest payment due at the end of 2013.
With creditor protection and court-supervision, the company will pursue a sale process and restructuring through a debt-for-equity swap. Colossus announced in a news release Tuesday. Debtor-in-posession financing will fund the company thorugh this six-week process.
Under the agreement, note holders would control 51.% of shares, streaming company Sandstorm Gold 38.8%, and lenders under a bridge loan 8%. Existing shareholders would hold approximately 1.7%.
Meanwhile, the Toronto Stock Exchange has been reviewing Colossus for delisting.
The company came close to securing facing through Arias Resource Capital Fund late last year but the deal fell through. According to the Financial Post, the miner needs an additional $70 million to bring the mine into production.
Colossus, for a long time considered a very promising junior, is developing the Serra Pelada mine in Brazil. Construction was well under way when the project was put on care and maintenance at the beginning of this year.
After two resignations in December, the company has been left with just two members on its Board of Directors.
In order to conserve what little cash it has left, Colossus announced earlier this month that it would lay off about 400 workers at the project and “significantly” reduce the number of employees at its Toronto office.
In an interview with the Gold Report last month, James West of The Midas Letter called the Serra Pelada mine “one of the highest-grade platinum/palladium/gold deposits ever discovered.”
“Even if gold went down to $800/oz, this is a project that would still be very economically viable,” West said.
But Colossus has taken a beating over the past year. In January 2013 the company was trading at about $5 per share. Now it’s down to less than five cents. A trading halt was imposed on Tuesday.
