Firstgold Corp (fka FGOCQ)

[Madclown]

They have ceased production because they need capital to operate. I don't know how much cash they have right now but it probably isn't much. The latest financials were as of October 31, 2009, so they are a bit stale right now. They appear to have been paying creditors and contractors with equity as the outstanding shares have increased dramatically over the past year. The deal with Northwest that was cancelled by the Obama Administration in late December was for $26 million, some in cash, some in debt assumption for a 51% stake in the company. This deal would have allowed production and exploration to resume and for all debts to be kept current. When the deal fell through, Chapter 11 became the obvious, if not the only choice. I believe that at some point there were 2 other potential suitors out there but the Northwest deal was the most promising.

This bankruptcy is all about finding a buyer or someone to partner with that will provide an equity injection. The company has made overtures that they intend to find a deal that will preserve value for equity. Remembering that creditors and contractors have been converted to equity in the past year may be the reason to want to find a deal that does preserve equity.

We shall see what happens.