The fate of a gold and silver mine in eastern Kern County may hinge on a shareholder vote scheduled to conclude this week.
Investors led by a man whose family owns about half the Soledad Mountain mine just outside Mojave have proposed buying the other half from Golden Queen Mining Co. Ltd., the Canadian company that operates the mine.
Two independent advisory firms have issued recommendations in support of the purchase, valued at $37.2 million, including debt forgiveness and $4.25 million in cash.
Both advisory firms, International Shareholder Services and Glass Lewis & Co. LLC, warned the mine may be unable to service its debts if the transaction fails to win the support of shareholders.
Although the transaction may seem unattractive, San Francisco-based Glass Lewis said in a statement Monday, "the alternative — bankruptcy — is certainly the least appealing option for disinterested shareholders."
Moreover, a special committee of shareholders set up to review the transaction issued a statement Friday in support of the buyout.
"While the Soledad Mountain mine continues production, it is clear that the company will not receive any dividends for the foreseeable future," committee Chairman Paul Blythe said in Friday's company earnings statement. "Without an immediate cash injection, the company is unable to service its current debt.
"Should the transaction not be approved by the shareholders on May 13th, 2019," he continued, "it is likely that the company will commence insolvency proceedings."
Golden Queen has reported its income from continuing operations deepened last year, going from a $6.18 million loss at the end of 2017 to a loss of $6.88 million during the 12 months ending Dec. 31.
After almost three decades of preparation, the Soledad Mountain mine opened in 2016 with 101 employees. Records show its employment expanded to 218 by Sept. 30.
The buyout proposal by the family of Thomas M. Clay and other investors comes with a pledge that if by June 20, 2020, they are able to sell Golden Queen's share for at least $55 million — 12 times the purchase offer first disclosed Jan. 4 — then the buyers would refund the company 20 percent of the new sale price.
Voting will be cut off at 10 a.m. Thursday. Voting results are expected to be certified at an annual shareholder meeting set for Monday.