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[Dragynn]

FGOCQ- BK summary from Madclown, I have seen it posted that they are sitting on close to a million ounces of gold, but have not verified it, here is Madclown's post from that board:

FGOCQ Firstgold Corp. Bankruptcy Case Summary

Firstgold Corp. (FGOCQ.PK) is largely a development stage mining company with one previously productive property. The operations were shuttered a few years ago when gold prices declined. Now they need more money to continue production at the previously producing site as well as money to inject into the other leased sites. They did not have production during 2008 and 2009 but this is not necessarily a 100% development stage company. It has some production capacity at its Relief Canyon Mine but no funds to go and get the gold out of the ground. It looks like the setup and exploration costs were more than anticipated which created too much debt load too early.

The company looks bad on paper ($17 mill assets vs. 26 mil debt) but they are actively shopping the company for a buyer or a partner. They just had a deal with a Chinese company (Northwest Nonferrous International Investment Company) to inject $26 million into the company (some cash, some debt assumption) for a 51% stake but the Committee on Foreign Investment in the United States (CFIUS) shot the deal down on Dec. 21, 2009 because the mines were too close to a military installation, which raised national security concerns. The termination of this deal is what prompted the BK filing as the company needs more time to find a buyer or partner. They have been converting their note holders to equity and have been paying vendors/contractors with equity for a while now, to the tune of about 100 million shares over the past year. There are a little less than 200 million outstanding.

In its press release concerning the BK filing the company expressed its intentions to preserve equity value for stockholders. When they say that they intend to preserve value for the shareholders I am guessing it is because the people they owe money to and the contractors that work for them have been paid in shares as opposed to cash. There are a lot of stock warrants in the $0.15 and $0.40 range that were issued with certain debt taken out recently so there are people who, at least there were recently, people who believed in this company’s prospects for extracting some gold or other minerals (they also have clearance to extract a variety of minerals, including Zinc & Uranium) out of its 4 mining operations. The company filed for BK on Jan 27, 2010 and there has been almost no selloff (volume wise) relative to the 200 million o/s. The price, however, has come down dramatically.

This case will not be on KCCLLC or EPIQ (free court document services) so PACER (pay per use service) is the only way to go.

There are probably about 80% of the current shareholders that are sitting on losses in the 70% range based on recent price/volume action. The corollary here is that if there was going to be a mass selloff, it would likely have already occurred. During the period following the bad news of December 21, 2009 (this was not the bankruptcy day but it was the day that it became imminent) there has been nearly 50 days that have elapsed since that time. In that span of time, only about 41 million of the nearly 200 million outstanding shares changed hands or roughly 20%. This is hardly a capitulation event. Either the collective shareholder base believes a recovery is in the offing and this is a temporary setback or there just is no conviction to sell at this price level.

You will see some language in the 10-Q about having recently raised the authorized shares to 900 million from 250 million. I am guessing the increased share count was to effect the transfer of half the O/S over to Northwest and the other portion may have been in anticipation of further converting debt or accounts payable to equity.

As the case now stands, the Debtor’s are seeking to obtain a DIP loan of $350,000 at 12%. The terms also call for the subscribers to enjoy equity conversion rights as well as rights to purchase gold reserves at $500 per ounce for each $150 subscribed. Here are some of the items of note from the filing:

“The DIP Facility provides for the extension of credit in a maximum post-petition amount of $350,000, by issuance of Gold Notes in the form attached hereto as Exhibit "A". Although the Gold Notes indicate that the total proceeds to be raised are $500,000, Debtor raised $150,000 in cash pre-petition under the Gold Notes, and requests authorization at this time to borrow an additional sum not to exceed $350,000 post-petition.

Furthermore, even though the notes are styled as Secured Exchangeable Promissory Notes they are not secured by any collateral and are in actuality unsecured notes. Due to the immediate cash needs of the Debtor, the Debtor has already obtained an additional $100,000 advance under the Gold Notes post-petition on February 4, 2010.”

“Use of Proceeds - The DIP Facility will be available to finance the Debtor's ongoing business operations, pursuant to the Cash Requirements Budget attached hereto and incorporated herewith as Exhibit "B".”

“Subject to regulatory approval, the promissory note shall be exchangeable at the option of the holder into either (i) common shares of Firstgold Corp. at a price of $0.036 cents per share or such other lower price if Firstgold should accept or issue equity at anytime before December 31 2012 at a price lower than $0.036 per share.”

“FGD has the right to call the promissory note and the gold rights. By paying 4.33 times the original promissory note amount in FGD shares at $0.036 per share with a maximum profit of $500 per ounce.”

The secured creditors have opposed the DIP citing windfall profits for the subscribers to the tune of about a 400% return. The debtors contend that funds are needed immediately to preserve the value of their permits and to continue maintaining the properties until more permanent financing can be obtained or until a buyer or equity partner can be found.