Golden Phoenix strikes back and asserts its rights at Mineral Ridge
Steven Ralston, CFA
Late yesterday, Golden Phoenix Minerals (GPXM: OTCBB) announced the removal of Scorpio Gold (SGN: TSX-V) as the manager of Mineral Ridge gold project in Nevada. Officially, Scorpio will be removed and Golden Phoenix Minerals will be appointed manager at a Special Meeting of the MRG Management Committee to be held in Las Vegas later this week.
It was the failure of Scorpio Gold to achieve commercial production at Mineral Ridge that precipitated Waterton Global Value LP to deny Golden Phoenix access to the third tranche of funding under the Senior Secured Gold Stream Credit Agreement, which in turn resulted in the inability of Golden Phoenix to make a payment in mid-December 2011 pursuant to the Santa Rosa Acquisition Agreement. This failure to perform by Scorpio Gold and for continuing to fail in the performance of material obligations for a period of sixty days after given notice in early February are cited by Golden Phoenix as the raison d’?tre for the necessary change in manager at the Mineral Ridge mine.
Golden Phoenix intents and expects mining operations to continue without interruption upon its assumption of the duties as manager of the operations. No changes are expected in current employees, contractors and agreements at the Mineral Ridge mine.
True to its word, Golden Phoenix is vigorously protecting its rights and interests through this action yesterday and previously by filing a lawsuit against Scorpio Gold and Waterton Global Value for 13 separate Causes of Action related to the Notices of Default, which were received as a direct result of Waterton’s refusal to grant funding pursuant to the $15.5 million debt draw-down facility, also known as the Senior Secured Gold Stream Credit Agreement.
We maintain our Outperform rating on Golden Phoenix and reaffirm our price target of $0.20.
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