Relief Canyon mine owners ponder future

The companies that have taken control of a troubled gold mining property near Lovelock are thinking about whether they'll resume mining activity.

Firstgold Corp. of Lovelock was pushed into bankruptcy court after its plan to finance a mine at Relief Canyon with Chinese investors was shot down by a federal agency.

The Committee on Foreign Investment in the United States ruled in December that the mine is too close to facilities associated with the Naval Air Station at Fallon to justify a foreign presence.

Three secured creditors of Firstgold took control of the property after Firstgold told a bankruptcy court in April that it couldn't come up with a plan to reorganize its operations.

Senetek PLC of Napa, Calif.; Platinum Long Term Growth LLC of New York City; and Lakewood Group LLC of New York City now are trying to decide what to do with Relief Canyon.

Howard Crosby, president of Senetek, said that the property has produced more than 300,000 ounces of gold under previous operators, and facilities at Relief Hill might be used for custom processing of ores from other mines.

Firstgold spent $16 million over two years developing ore-processing facilities at the site.

He said the group that controls the property thinks that permits could be in place within 12-18 months to resume mining.

One alternative, Crosby said, is creation of a joint venture with an outside partner to get the mine back into operation.

At the same time, he said, the companies haven't ruled out a sale of Relief Canyon to raise money to cover the $19.3 million that they're owed.

Senetek became part of the group controlling the mine when it paid $5 million for Firstgold debt that had been held by a partnership that is majority owned by Platinum Partners Value Arbitrage Fund.

A spokeswoman for Senetek said the companies haven't established a timeline to make a decision about the future of Relief Canyon.