Con mine still on the block

Despite weak market conditions, Nerco (NYSE) is still considering the possible sale of its minerals subsidiary which owns and operates a number of precious metal mines, including the Con gold mine at Yellowknife, N.W.T.

Although no decision has yet been made, Nerco estimates that a completed sale would result in a pretax loss of more than US$150 million based on a recent evaluation and current market conditions.

A loss of this magnitude would result in violation of a US$525-million minimum net worth covenant of the company’s principal debt agreement, but Nerco is optimistic it will be able to obtain appropriate waivers of this requirement by year-end.

Nerco’s asset-sales program is aimed at raising cash for debt reduction. The company intends to focus its future strategy on its core Gulf Coast oil and gas operations, and Powder River Basin coal operations in the U.S.