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Harte Gold enters creditor protection

Australia's Silver Lake Resources positioning to acquire White River mining operation
Harte Gold Sugar Zone Mine aerial 3
(Harte Gold photo)

Beleaguered White River gold miner Harte Gold is entering creditor protection while an Australian mining company is making moves to take over the distressed company.

Toronto-based Harte Gold said in a Dec. 7 news release that it will file an application to the Ontario Superior Court of Justice for an initial order under the Companies' Creditors Arrangement Act (CCAA), while Perth-based Silver Lake Resources manoeuvres to acquire the Sugar Zone gold mine, north of White River.

The Sugar Zone, an expanding underground operation, entered commercial production in 2019. The mine is on an 81,000-hectare property, sitting on a mineral-rich greenstone belt.

A numbered subsidiary company of Silver Lake Resources has entered into an agreement with Harte Gold to loan up to $10.8 million to fund mining operations through the CCAA proceedings.

Harte had been in danger of running out of money by year's end, which would have resulted in a halt to all operations.

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If the court approves the financing, it will provide Harte Gold with the cash to continue operations at Sugar Zone until the closing of a transaction. The news release does not state when this might take place.

Harte calls the financing a demonstration of "Silver Lake’s strong support of the Sugar Zone Mine and the restructuring process."

Silver Lake is a public-traded company on the Australian Securities Exchange and operates a series of gold and copper mines in Western Australia. This would be the company's first potential foray into Canada.

The company appeared on the scene last month when it acquired US$63.2 million in debt facilities from BNP Paribas, Harte's largest creditor.

Harte said if the court grants the CCAA application, it will trigger the start of a court-supervised sale and investment solicitation process.

Silver Lake's loan agreement with Harte is categorized as a "stalking horse" bid method, allowing other interested parties to "submit superior proposals and enabling Harte to "determine the highest and best available transaction for the company and its stakeholders."

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In the release, Harte calls this turn of events the "culmination" of the strategic review process it launched last May. After looking at all the alternatives, Harte's board of directors concluded this is in the best interests of the company and its stakeholders to enter CCAA.

Trading in Harte Gold’s common shares on the Toronto Stock Exchange is expected to be halted. The company said it anticipates that its common shares will be delisted in due course.