Magna Gold, subsidiary get creditor protection, aim to restructure

By Sarah Lizee

Olympia, Wash., March 3 – Magna Gold Corp. filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act (Canada) which will provide creditor protection while it seeks to restructure its affairs, according to a press release issued Friday.

KSV Restructuring Inc. was appointed as proposal trustee under the NOI to monitor Magna Gold's operations and restructuring.

The effect of the NOI is an initial and immediate stay of proceedings in favor of Magna Gold for 30 days.

The stay can be extended by court order.

In coordination with the NOI, Magna Gold's indirect subsidiary, Molimentales del Noroeste SA de CV, filed an application for restructuring and provisional creditor protection before the Second District Court for Insolvency Matters located in Mexico City under the Mercantile Insolvency Act.

Molimentales is the owner and operator of the company's San Francisco Mine.

The initial ruling in connection with the insolvency application was issued by the Concurso court on Friday and certain preemptive protections were granted in favor of Molimentales including, among other things, a suspension of all enforcement proceedings against the assets or rights of Molimentales.

“The decision to seek creditor protection for Magna Gold and Molimentales was made after careful consideration of the company’s cash position, scheduled debt payments, forecast revenue and expenses and all available alternatives,” Magna said in the release.

“Following consultation with its legal and financial advisers, the board of directors of Magna Gold determined that it was in the best interests of Magna Gold and Molimentales and their stakeholders to seek to restructure their affairs under the applicable creditor relief laws.”

The proceedings are intended to facilitate a restructuring of the company’s balance sheet, the injection of additional capital, a sale of the company or its assets, or any combination of those.

Management of Magna Gold and Molimentales remain responsible for the day-to-day operations, under the general oversight of the proposal trustee and the Concurso court.

The TSX Venture Exchange has advised Magna Gold that the trading of its common shares will be transferred to the NEX Board of the TSXV effective at the opening of the market on Wednesday.

The trading symbol will change to “MGR.H” from “MGR.”

No directors of Magna Gold have resigned and the board of directors continues to be comprised of six directors.

According to Magna Gold’s consolidated financial report for the three and nine months ended Sept. 30, the company had total assets of $77.52 million and total liabilities of $75.54 million.

Magna is a Toronto-based gold and silver production company engaged in acquiring, exploring, developing and operating precious metals properties in Mexico.

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