March 6, 2013
By: John Clark
Rodeo Creek Gold Inc., a large-scale international mining operation, has filed for bankruptcy protection, according to a recent report from Bloomberg News.
Sources say the mining company, which engages in the "exploration, development and operation of high-quality gold properties" is looking to sell some of its assets in order to appease its senior creditors.
In its bankruptcy petition, which was filed in U.S. Bankruptcy Court in Reno, Nevada, the company listed assets worth somewhere between $50 million and $100 million, but it also has more than $100 million in debt.
Before filing bankruptcy, Rodeo Creek officials tried to find an emergency loan to allow it to continue its operations while it sought a sale of its assets through an independent process. But this effort reportedly failed, which prompted Rodeo Creek to turn to the bankruptcy court for help.
According to CEO Raymond Dombrowski, the company launched a campaign in December to sell its operations in Nevada, but none of the bids that were tendered were high enough to "warrant a stalking-horse designation."
In other words, none of the proposed offers were lucrative enough to justify selling the company’s Nevada assets, so Dombrowski and his colleagues decided to test their luck in a bankruptcy auction.
Sources say the company’s assets could fetch a high price at auction. The Nevada outfit includes nearly a thousand federal mining claims, most of which rest in the Carlin Trend gold belt, a potentially lucrative area in Nevada covering more than 42 square miles.
In a recent statement, Dombrowski blamed the company’s troubles on "severe gold production shortfalls," which have forced Rode Creek to seek "substantial additional funding."
The company reportedly owes more than $13 million to its 20 largest creditors, which includes a $2.7 million debt owed to the State of Nevada, as well as multimillion claims owed to Quality Transportation Inc., San Juan Drilling Inc., and Sandvik Mining & Construction USA LLC, sources say.
In addition to Rodeo Creek’s filing, several affiliates, including Antler Peak Gold, Hollister Venture, and Touchstone Resources are also looking for bankruptcy help, according to sources covering the bankruptcy proceedings.