Allied Nevada shareholder claims proposed property sale is collusive

By Kali Hays

New York, May 20 – Allied Nevada Gold Corp. shareholder Brian Tuttle asked the U.S. Bankruptcy Court for the District of Delaware to stop the proposed $17.5 million sale of the company’s exploration properties to Clover Nevada, LLC, according to a Wednesday motion.

Tuttle claims that Clover Nevada is merely a shell corporation being used by Waterton Global Resource Management to purchase the assets, as Clover Nevada has no current projects and only one managing member in Elko Mining Group LLC.

Elko Mining also only has one managing member, Richard J. Wells who is the chief financial officer of Waterton Global, according to the motion.

Moreover, Tuttle claims that “within weeks” of Allied’s bankruptcy filing, Waterton Global had hired the debtors’ former corporate mine planning engineer, Anthony Peterson.

Peterson is now the only member of Waterton Global’s project evaluation team who had not worked for Barrick Gold immediately prior, and Tuttle also asserted that Allied’s chief executive officer, Randy Buffington, was a manger of Barrick Gold before joining Allied.

Tuttle claims that in April, after an Allied shareholder posted a question online regarding the possibility of Clover Nevada being connecting with Barrick Gold, Waterton Global removed all references to Barrick Gold on its website and said that “due to the timing and the circumstances of the removal” it is worth noting.

With this information, Tuttle claims that “no reasonable party could realistically believe” the proposed transaction was negotiated “either in good faith or at ‘arm’s length.’”

“The sale should not be cleared by the court until the debtors, as well as the stalking horse bidder, can provide evidence that confirms: there were no bad faith negotiations, collusion or agreements entered into that do not include arm’s length transactions, and that all potential bidders were solicited,” the motion stated.

Tuttle asked that if the court does not bar the sale altogether, that another hearing on the bid procedures and stalking horse agreement with Clover Nevada be held.

Allied Nevada is a Reno, Nev., gold and silver miner that filed for bankruptcy on March 10. Its Chapter 11 case number is 15-10503.

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