Last minute rescue deal fails LynnGold closes gold mine

Mining operations have already ended with milling expected to continue for about a month, LynnGold says. At the end of the third quarter, the company had liabilities of $15 million owing to secured creditors and $8.6 million to unsecured creditors. These liabilities are exclusive of any claims that might follow from the holders of gold warrants. The Toronto Stock Exchange has requested that LynnGold notify its gold warrant holders of their rights in the event that LynnGold is unable to meet its obligations.

Each gold warrant gives the holder by Nov 13 the right to buy 0.02 oz of gold from the company at a price of $7.50(US), or an option to take the cash equivalent. The $7.50 price is equivalent to a price of $375(US) per oz of gold.

LynnGold, which has filed a holding proposal preventing creditors from forcing the company into receivership until Dec 15, says it cannot deliver the gold or the cash equivalent to the holders. The warrant holders are unsecured creditors.

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