S.D.’s Yuba Seeks New Life in Restructuring Plan
Yuba Natural Resources, the troubled San Diego-based mining company whose former chairman Richard T. Silberman was arrested on money-laundering charges last April, announced a restructuring plan Wednesday that would hand control of the company over to Western Gold Exploration & Mining Co. Ltd. Partnership.
The partnership, also known as WestGold, already owns a two-thirds interest in a gold-dredging joint venture called Yuba Placer Gold on Yuba’s property near Marysville. Yuba owns the other third of the venture. Golden, Colo.-based WestGold acquired its interest from Bond International Gold in September for $6 million.
According to a letter of intent signed by the two companies, WestGold would contribute its two-thirds share in Yuba Placer Gold to Yuba Natural Resources in exchange for convertible preferred stock giving it 55% voting interest in publicly traded Yuba.
The restructuring, which is subject to conditions including shareholder and regulatory approval, would consolidate all mining operations under the reconstituted Yuba Natural Resources. The company’s headquarters would be moved from San Diego to Colorado.
The restructuring also calls for the spinoff of Yuba’s non-gold assets, including its silica mining operation, as a separate entity, with Yuba shareholders receiving one share in the as-yet-unnamed entity for each Yuba Natural Resources share they own. The silica mining operation has received a $1.2-million loan from WestGold to pay creditors.
Yuba was in extreme financial straits even before Silberman’s arrest and is in default to several creditors, including Bank of America, which is owed $7.3 million. Bank of America and others have agreed to restructure their loans pending the change, Yuba president Peter L. Jensen said Wednesday.
“It’s a heck of a deal for shareholders, since Yuba should have been bankrupt about 20 times by now,” Jensen said.
The new Yuba will be able to meet its debt obligations to creditors from gold-mining cash flow, WestGold general counsel Gary Callahan said Wednesday.
Yuba Natural Resources’ principle asset is a 10,000-acre placer gold field 10 miles east of Marysville. The Yuba-WestGold joint venture operates a giant dredge that scoops ore from a riverbed on the property at depths of 100 feet or more and which refines the ore into gold ingots. The joint venture produced 25,780 ounces of gold in 1989, Yuba said Wednesday.
WestGold is a partnership of Inspiration Resources, a publicly traded natural resources company based in New York, and Minorco of Brussels. WestGold’s U.S. operations include a placer gold mine in Nome, Alaska, that is similar to Yuba’s, and an open pit gold mine in Austin, Nev.
If the restructuring plan falls through, Yuba has agreed to sell its one-third interest in Yuba Placer Gold to WestGold for $6 million, Yuba said in a statement Wednesday.
Silberman and four other defendants are scheduled to be tried on money-laundering charges in federal court in San Diego April 10. Silberman, husband of County Supervisor Susan Golding, was a member of former Gov. Edmund G. Brown’s cabinet.
