Oil companies are not the only ones suffering from lower commodity prices.
Bullion.Directory precious metals analysis 10 March, 2015
By Christopher Lemieux
Senior Analyst at Bullion.Directory; Senior FX and Commodities Analyst at FX Analytics
Allied Nevada Gold (ANV) has succumbed to the treacherous gold mining industry, as news breaks that the company has now filed for bankruptcy protection. The collapse of gold prices and convoluted cost structure in recent years have been a struggle for gold miners with the world’s largest miners seeing cost of production nearing $1,000 per ounce of gold.
Allied Nevada is said to have reached an agreement with a group of bondholders for a $78 million debtor-in-possession credit facility that will allow the minor to continue production while restructuring of debt occurs. During the height of gold prices in 2011, Allied Nevada’s stock reached a high of $45, while now it currently trades for under $1. The company had to raise $21.5 million in emergency funds last December by offering shares for $1 via warrants.
The miner has less than $4.5 million in cash and debts of over $600 million. Allied Nevada said the reason for the bankruptcy was a combination of mine setbacks, an over-leveraged capital structure and exposure to currency swaps.
Shareholders are expected to get warrants to buy equity if they choose to vote in favor of the plan, or shareholders will get absolutely nothing as creditors take over equity. Any existing stock will be canceled.
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