PureGold Mining has applied for an initial order for creditor protection from the Supreme Court of British Columbia.
The Vancouver-based company suspended operations in Red Lake last week, placing the mine and its employees under care and maintenance, stating the mine has not yet achieved consistent positive site-level cash flow.
Officials say the decision to commence creditor protection proceedings was made after careful consideration of PureGold’s cash position, scheduled debt payments, forecast revenue and expenses as well as all available alternatives to avoid bankruptcy.
The move is intended to facilitate a restructuring of the company’s balance sheet, the injection of additional capital, a sale of the company or its assets, or any combination.
The order allows PureGold to meet immediate cash needs for the continuation of its business activities and preservation of its property.
The Red Lake Mine will remain in care and maintenance and management is expected to remain responsible for the day-to-day operations, under the general oversight of a Monitor.
The company says its current cash balance sits at $2 million and its net working capital deficit sits at $13 million.
They had been hoping to secure outside financing to continue operations, but plans to exercise warrants at $0.18 per share fell through earlier this year.
