Liquidation Of Bonte Gold Mines Limited
Akrokeri-Ashanti Gold Mines Inc. today announced that it has petitioned Bonte Gold Mines Limited ("Bonte"), its 85%-controlled Ghanaian subsidiary that operates the Bonte gold mine and holds a 30-year mining lease on the Esaase property, into official liquidation in Ghana.
As previously announced by the Corporation, production levels at the Bonte gold mine have remained low due to the shortage of dependable, operating mining equipment and the low grade of the alluvial material that is presently being mined. The exploration program implemented by the Corporation that was cancelled due to lack of funds was unable to identify new areas of higher-grade ore. Moreover, recent attempts to further reduce costs and increase cash flow at the Bonte gold mine operations have been unsuccessful and the Corporation and Bonte continue to be severely constrained by their high levels of debt and poor cash flow, despite the suspension of payments on the Corporation's 14% Convertible Subordinated Debentures and 18% Secured Notes, as previously announced by the Corporation. On March 4th, 2004, Bonte received a letter of demand from its largest creditor for U.S. $3,400,000 and is unable to meet this demand or any future pending demands for payment of overdue debt.
There are no laws in Ghana that allow corporations to apply to the court for protection from creditors whilst producing a plan of reorganization. Therefore, based on advice received from its professional advisors in Ghana, the Corporation believes that the official liquidation of Bonte is the best route to pursue in this situation. It will not prejudice the interests of the creditors of the Corporation or Bonte or the Corporation's shareholders but will rather afford the Corporation a better opportunity to deal with all the issues relating to the insolvency of Bonte under the supervision of the Ghanaian Registrar of Companies, who is required to act as the Official Liquidator of Bonte under the laws of Ghana. Without the official liquidation of Bonte, the Company would not be in a position to defend itself against or contest suits from its creditors or pay any judgement debt awarded against it under the applicable laws in Ghana.