Harte Gold’s Sugar Zone mine attracts second bidder

A second potential buyer has emerged for Harte Gold (TSX: HRT), with an auction that will determine the winner of the distressed company’s assets to be held on January 19.

Harte, whose sole asset is the Sugar zone mine in Ontario, was granted creditor protection by the Ontario Superior Court of Justice in early December. The front-runner for the asset is Australia’s Silver Lake Resources (ASX: SLR).

In November, Silver Lake acquired $63.3 million in credit facilities extended to Harte by BNP Paribas. It also agreed to loan the miner C$10.8 million.

Harte Gold reported in May that it was unable to pay its debt obligations and that it would need to raise funds before the end of the year to continue running the operation. It also engaged in a strategic review process.

Stalking-horse bid

As part of a court-approved process, Silver Lake submitted a stalking-horse bid (used to establish a baseline value for the assets) in December. Other interested parties had until January 14 to submit a better offer. The other bidder has not been revealed.

Production at Sugar Zone, 30 km north of White River, began in 2019. At the beginning of 2021, management expected the underground mine to produce 60,000 to 65,000 oz. for the year. The company was also considering expanding the mine to 1,200 t/d from 800 t/d. 

Guidance was revised downward in May to 50,000 to 55,000 oz. gold. Over the first three quarters of 2021, the mine’s actual production was 38,319 oz. gold.

(This article first appeared in the Canadian Mining Journal)