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Numbered [Cayman Islands] company takes over Bissett mine

Bissett_gold_mineBy Martin Cash From Winnipeg Free Press

The Bissett mine and all the assets of San Gold Corp. are now owned by 7097914 Manitoba Ltd.

The numbered company was created to hold the assets on behalf of Beechwood Re, a reinsurance operation based out of the Cayman Islands.

It’s now the owner because none of the solicited offers made during San Gold’s lengthy creditor protection process was large enough to pay out the secured debt of US$23,750,000 owed by San Gold to Beechwood.

Because substantially all of San Gold’s assets were acquired by the numbered company in what is referred to as a credit bid, San Gold does not have the ability to make a proposal to its other creditors.

Effective Tuesday, San Gold is effectively bankrupt.

Gord Neudorf, a partner with MNP Ltd., the court-appointed trustee in bankruptcy, said the first creditor meeting will be scheduled shortly.

But considering the fact the secured creditor has acquired the assets — rather than get paid out in cash — the meeting may be just a formality.

“We will do our work to see what happens,” Neudorf said. “At this point, due to the fact that really all the assets are being covered by the credit bid, on the face of it, there would not be a distribution. But it is too early to say for certain.”

But clearly, it is not promising.

In the trustee’s seventh report to the court filed June 17, it said, “Given the structure of the APA (asset purchase agreement), if approved, all of the closing proceeds shall be payable to the lenders (Beechwood’s numbered company). As the consideration offered equals the debt owed to the lenders, there will be no funds available for San Gold’s subordinate creditors to the lenders.”

San Gold has been operating the mine since 2005, but gold has been extracted from the Rice Lake area since the early 1930s.

Several companies have operated there since the early 1980s.

This will be at least the fourth time since then the mine has been forced to close.

During the intervening time, it had been dormant for more than 10 of those years.

A failed merger plan with another small producer late last year left San Gold in a jam, forcing the creditor protection. Since the beginning of the year, about 300 workers have been laid off.

This week, official notice was given the numbered company has acquired the shares in a couple of junior exploration companies — Wildcat Exploration Ltd. and SGX Resources Inc. — that San Gold has previously owned.

Republished from the Winnipeg Free Press print edition June 26, 2015 B6

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