KINGMAN - A U.S. Bankruptcy Court in Nevada has dismissed the Chapter 11 bankruptcy case filed by Sierra Resource Group, owner of Chloride Copper Mine, and approved a reorganization plan between Sierra Resource and Orotecno, an Ecuador mining corporation.
The structure of the plan calls for a definitive agreement between Sierra Resource and Orotecno, which owns four precious metal mines in Ecuador and had sales of more than $80 million in the last six months.
Orotecno would pay $1.1 million to acquire 100 percent interest in Sierra Resource's mining claims at the Chloride mine, with $1 million of that amount to be paid over two years from revenues after production at the mine begins.
The purchase is through M&C Metals Corp., a Delaware corporation and wholly owned subsidiary of Orotecno.
The plan also allows Sierra Resource to remain as the operator of the mine and to assist Orotecno in the renovation, build-out and permitting necessary to bring the mine back into production.
"Orotecno recognizes the values and efforts of the debtor (Sierra Resource) over the last several years to develop the necessary plans and relations to execute on the ultimate goal of producing copper at the mine," the agreement states.
Sierra Resource purchased the Chloride Copper Mine in 2010, but encountered problems with the permitting process.
Beginning in 2012, the company worked with the Kingman office of the BLM to obtain regulatory approvals necessary to renovate the existing facility and restart copper cathode production at a rate of 4 million to 5 million pounds a year.
Sierra Resource filed for Chapter 11 bankruptcy protection in March, listing $720,000 in pre-petition assets.
Investors such as Paul Schubert feel like they've been left in the dark throughout the entire process. He told the Daily Miner in February "the company itself seems to have gone to ground," and wouldn't return his phone calls.
The company hasn't issued a press release in years, the website is non-existent and it hasn't filed a 10-Q financial report in nearly two years. Its shares (SIRG) are currently being traded over the counter at a fraction of a penny.
"I myself cannot really tell if there has been a good-faith effort to revive the mine or whether the only serious mining has been targeted at the pockets of investors," Schubert said.
The debtor is working with CDM Smith for a complete restart of the Chloride Cooper Mine, including federal and state permitting, civil design and construction of a new heap leach pad and runoff ponds, as well as refurbishment of the existing plant and equipment and geological work.