McWatters pushed into administration

Gold miner McWatters Mining (MWA-T) has agreed to the appointment of a receiver under the Bankruptcy and Insolvency Act and plans to make a repayment proposal to its creditors.

One of McWatters’ secured creditors, the provincial government financing agency Investissement Qubec, sought an order in the Superior Court of Quebec that would appoint an interim receiver for McWatters. The company consented to the order, and accounting and management firm Raymond, Chabot has been appointed as interim receiver.

McWatters management continues to operate the business.

Under bankruptcy legislation, the company has 30 days in which to file a formal proposal to its creditors. Creditors must then approve or turn down the proposal in a vote held within 21 days of filing.

McWatters is looking for a buyer for its Sigma-Lamaque gold mine, near Val d’Or, Que., where operations have been suspended since the beginning of October. The company has now engaged Australian investment house Prime Capital Finance to find possible buyers or joint-venture partners for the project.

During the last half of 2003, McWatters sold many of its assets in a fight to stay solvent. Richmont Mines (RIC-T) took over the Fourax and East Amphi properties, both in the Abitibi region, in December 2003, paying $7 million cash and agreeing to a 2% net smelter return royalty (NSR).

Earlier this month, McWatters sold its Kiena property to Wesdome Gold Mines (WDG-V). Western Quebec Mines (WQM-T), which owns about 76% of Wesdome, transferred its right to acquire the property to its subsidiary; McWatters receives $2 million, plus the value of equipment and inventory, and keeps a 4% NSR.