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Insolvency court approves $10.8M loan to keep White River gold mine afloat

Australia's Silver Lake Resources in the lead with sales process to acquire Harte Gold
Harte Gold Sugar Zone 10
(Harte Gold photo)

An Ontario court has granted Harte Gold, the insolvent White River gold miner, some financial breathing room to stay productive into 2022.

On Dec. 16, the Ontario Superior Court of Justice approved a $10.8-million loan by Silver Lake Resources, an Australian mining company looking to take over Harte, and its chief asset, the Sugar Zone Mine, an underground mine not yet three years into commercial production in northeastern Ontario.

Last month, Perth-based Silver Lake moved in to acquire Harte by picking up US$63.2 million in debt facilities from BNP Paribas, Harte's largest creditor.

This was just before Harte entered creditor protection under the Companies' Creditors Arrangement Act (CCAA) on Dec 7.  FTI Consulting Canada is the court-appointed monitor.

A formal sales process is now underway with the court approving the use of a "stalking horse bid" by Silver Lake to establish a baseline to keep away any low-ball offers for Harte and set up a competitive bidding process.   

Companies and investors interested in entering the bidding fray have until the end of the business day on Jan. 14 to submit a superior proposal. To read the 'teaser' material, click here.

If no better bid materializes, Silver Lake will be declared the successful bidder, subject to court approval.

The court also extended the stay period — Harte's protection from creditors — until Jan. 31. To see who's owed money, click here.

All the documents and details on Harte's CCAA process are available here.

The Sugar Zone Mine, located 25 kilometres north of White River, sits on more than 81,000 hectares of property. The company ran into a number of operational and liquidity issues with the fledgling operation, exacerbated by the pandemic, that threatened to bring operations to a halt by the end of this month.

Facing cash issues earlier this year, Harte began looking for a partner or a buyer after starting a strategic review last May.

Silver Lake Resources, an Australian publicly traded mining company, runs two operations in Western Australia: the Deflector gold and copper mine, located 450 kilometres north of Perth, and its Mount Monger complex, a series of underground gold mines under the regional city of Kalgoorlie.