Allied Nevada seeks to raise $50 million for mine reopening

Allied Nevada Gold Corp. of Reno plans to raise $50 million through an offering of stock to finance the reopening of a mine west of Winnemucca.

In a prospectus filed with the Securities and Exchange Commission, the company says it hopes to begin work at the Hycroft Mine in May with production starting later this year.

The mine is at the eastern edge of the Black Rock Desert about 54 miles west of Winnemucca.

The property produced about 1 million ounces of gold from 1994 through 1998, when it was shut down because of low gold prices.

Allied Nevada estimates the mine could produce 375,000 ounces of gold in the first five years after production is restarted. At recent prices of about $875 an ounce, that production would be valued at more than $328 million.

The company says it needs about $40 million to get the Hycroft Mine back into production. That includes

about $26.6 million in mining costs and about $13.4 million for working capital and the bonds that are required by regulators.

Allied Nevada says it would used the remaining $10 million raised by the stock offering to explore other prospects it controls in Nevada.

Once the mine is in full operation, the company expects it will employ about 70. Historically, most workers at the mine lived at Winnemucca.

Allied Nevada was created through the combination of the Nevada assets of Vista Gold of Littleton, Colo., and the mining properties of Carl and Janet Pescio of Elko. Vista distributed its portion of the Allied Nevada stock to its shareholders, and the Pescios remain the largest individual shareholders in the company.

In the quarter ended Sept. 30, the company reported a loss of $3.4 million. It had $21.8 million in cash on its books at the end of the third quarter.

The company's shares were trading on the American and Toronto stock exchanges last week at about $5. The shares have traded as high as $7.80 on the AMEX since the company was created.