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Johnson Camp mine sale OK'd

San Pedro Valley News-Sun of Benson, Arizona

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The process for the sale of Nord Resources Corp.'s Johnson Camp Mine officially began Monday, and despite a recent delay there are expectations of the sale being final before Dec. 1, said Receiver Christopher Linscott after its approval at Pima County Superior Court in Tucson.

A 30-day comment period is included during escrow, as the buyer, Excelsior Mining JCM. Inc., wants to be sure there are no objections to the sale, Linscott said. Excelsior's flagship property, Gunnison Copper Project, is located immediately adjacent to Johnson Camp in Dragoon, between Willcox and Benson, said a press release from JJ Jennex, Excelsior Mining Corp. Vice President of Corporate Affairs.

Linscott said Monday, "We should still close before the end of November, which is a big savings for Ned-bank (Nord's lender). We don't want to go into December, as it would cost in the tens of thousands of dollars (more than $50,000) because the (Cochise) County Assessor charges 16 percent interest on any unpaid property tax balance. That's a large number for Nord," that would have to be paid by Nedbank, he said.

The sale was delayed when a Chapter 11 bankruptcy petition by attorney Erick Sparks, for Nord Resources Corp.'s Chairman of the Board of Directors Ron Hirsch, was filed 15 minutes prior to the Oct. 15 hearing for the approval of the sale at superior court.

During the Oct. 21 hearing at U.S. Bankruptcy Court, District of Arizona, in Tucson, the judge asked for an evidentiary hearing to be held Friday, Oct. 23. Both Linscott and Excelsior had filed responses to the bankruptcy petition on Oct. 15 and 16, respectively.

Linscott noted in his response that Nord's filing was "a bad faith attempt to avoid or delay the regularly scheduled sale. This delay in the sales process has created havoc for the funding of mine operations and for the employees, vendors, and parties contractually related to Nord."

Excelsior's response stated, "There are employees at the mine. However, the Receiver has no source of income to pay Receivership expenses," which have been funded by advances by Nedbank and deposits in connection with proposed sale of the assets.

At the Oct. 21 hearing, the Judge allowed the banks to pay payroll for Johnson Camp Mine's 19 employees. Linscott said, when they filed for Chapter 11, the bank accounts were frozen and we were stopped dead in our tracks. They allowed the banks to go ahead and pay the employees."

At the hearing on Friday, Oct. 23 at the U.S. Bankruptcy Court, Nedbank's response to the Chapter 11 petition, filed on Thursday, was also heard.

In their response, Nedbank Limited supported both Excelsior and Linscott in asking for abstention or dismissal of the petition, and stated that "When, as in the present case, there is an existing mechanism in place to administer the debtor's assets and claims, abstention is appropriate."

It continued, "In the present case, the Receiver has been managing Nord Resources and its primary asset, Johnson Camp Mine, for 11 months. Since that time, he has worked with the retained employees, and has dealt with the regular expenses of both operating and maintaining the business. He has been funding payroll, benefits, utilities, insurance, and equipment maintenance, among other expenses.... the Receiver has had to seek funding from Nedbank, an undersecured creditor, to make up substantial shortfalls from the Debtor's operations.

"During the last 11 months, the Receiver has also been soliciting offers for the purchase of the Debtor's assets. The Receiver negotiated with an interested buyer approximately six months ago, and obtained approval for a sale from the judge in the receivership proceeding. No creditor objected to the sale, although notice was given. Instead, certain shareholders filed an objection to the sale that the court overruled in part because the owners did not stand to receive any of the proceeds of the sale. The buyers were unable to close and the Receiver set to work to find another buyer.

"Throughout this 11-month-period, the Receiver has developed relationships, reduced expenses, and obtained funds from prospective buyers and from Nedbank in anticipation of a sale. Such funds would not be available absent the prospect of a sale. With the current sale, which was thwarted by the shareholder's bankruptcy petition, the Receiver procured funds to be held in escrow pending entry of a sale order, that would allow the Receiver to continue to protect and preserve the property until the sale was to close (30 days after entry of the order)," Nedbank's response stated.

The Judge dismissed the bankruptcy petition, allowing for a hearing Monday, Oct. 26 at Pima County Superior Court to ask for the approval of the sale.

Johnson Camp Mine has been in receivership since Nov. 18, 2014 after owner Nord Resources Corp's principal secured lender, Nedbank Limited refused to refinance or renegotiate the terms of a $52 million debt. Instead, Nedbank filed for a court appointed receiver in Pima County Superior Court, with Linscott as the receiver, responsible for all of Johnson Camp's assets.

Linscott said Monday he has no plans to lay off any other employees at Johnson Camp Mine prior to the sale.

"From there Excelsior makes all the decisions," he said.

However, when asked about sick and vacation time pay for seven employees who had been laid off earlier this month, Linscott said, "Any sick or vacation pay they had prior to the receivership, they won't get paid (that money)."

The Oct. 2 court document for motion to approve the sale, by Linscott's attorney Micheal McGrath of Mesch, Clark & Rothschild, PC. of Tucson, stated, "The purchase price paid by the purchaser will first go to fully satisfy the property taxes secured by the assets. The remainder of the purchase price proceeds will go to receivership expenses and to partially satisfy the secured claim of Nedbank in excess of $53 million that encumbers all of Nord's assets.



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Original Publication Date: November 4, 2015



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