Attention Business Editor:
DAKOTA MINING CORPORATION SUBSIDIARIES ANNOUNCE VOLUNTARY REORGANIZATION UNDER CHAPTER XI OF THE BANKRUPTCY CODE
DENVER, May 22 /CNW/ -- The Board of Directors of Dakota Mining
Corporation ("Dakota") or (the "Company") announced today that its sole gold
producing subsidiary, USMX of Alaska, Inc., ("USMXAK") filed voluntarily in
Denver, Colorado to reorganize under Chapter XI of the Bankruptcy Code.
Dakota and its subsidiaries have not been able to resolve their severe
liquidity and other financial problems. Neither Dakota nor its other
operating subsidiaries have filed for bankruptcy at this time, although they
may determine to do so in the future as a result of their financial
conditions.
Alan R. Bell, President and Chief Executive Officer of Dakota, stated, "We
have been in discussions with our debenture holders, principal secured lenders
and creditors for several weeks now, but have failed to reach agreement on a
debt restructure that would allow the Company to continue as a going concern."
The $1.1 million 90-day interim financing facility provided by N M Rothschild
& Sons, Limited ("Rothschild") has expired, as a result of which Rothschild
has applied the cash collateral account to satisfy that loan.
Dakota and its subsidiaries now owe an aggregate of in excess of $38
million of which approximately $18.4 million is owed to the holders of
Dakota's convertible debentures, $9.7 million is owed to Rothschild, $3.7
million is owed to Gerald Metals, Inc. and $5.4 is owed to D. H. Blattner and
Sons ("Blattner"). Of these amounts, USMXAK owes on a secured basis $9.7
million to Rothschild, $1.7 million to Blattner and $0.7 million to other
trade creditors.
Bell continued, "Daily operations will continue in the production of gold
at Illinois Creek. Operations at other Dakota subsidiaries have already been
discontinued except for limited reclamation and compliance activities."
Dakota continues to request that various state and federal agencies permit
it to draw down on existing cash bonds for the purpose of funding reclamation
and permit obligations at certain mine sites. The Company has approximately
$9 million in cash bonds associated with its Illinois Creek, Stibnite, Gilt
Edge and Goldstrike mine sites. There can be no assurance that the Company
will succeed in obtaining the release of these funds or that the funds will be
adequate to satisfy all compliance obligations.
Statements in this release which are not historical data are forward
looking and involve a number of risks and uncertainties, including but not
limited to the price of gold, production, construction and permitting or
regulatory delays, reserve estimation of tonnage, grade and metallurgical
recoveries, exploration success and reserve growth, litigation, capital costs
and other risks that are detailed in the Company's SEC filings.
For further information, please contact Alan R. Bell, President and Chief
Executive Officer (303) 573-0221, FAX (303) 573-1012.
-0- 05/22/98
For further information: Alan R. Bell, President and Chief Executive Officer, Dakota Mining Corporation, 303-573-0221, FAX 303-573-1012
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