Standard Tolling (TON.V) has updated the market on its activities in Peru, where it planned to sell the mill and ore to Inca One Gold (IO.V). All the existing ore but two trucks have been shipped to Inca One’s Chala facility, but when Standard Tolling started to break down the mill with the intention to ship it to Chala for storage, its activities were stopped by local vendors that were still owed $300,000 by Standard Tolling for unpaid invoices.
As Standard Tolling now has almost no hope left to recover any value of its assets, the company has now said it is insolvent and won’t be able to service its debt that is due by the end of this year. The Chairman, President and CEO Len Clough has resigned, and it looks like there will be no value left for Standard Tolling’s shareholders at all. This also means the deal with Inca One will have to be reworked again, as Inca will surely want to avoid the hassle of dealing with Standard Tolling’s creditors before being able to remove the mill.
We expect the revised agreement between Inca One Gold and Standard Tolling to only include a deal on the ore notes. No details have been announced yet, but a simple ore note swap will probably be the best solution in this situation. Meanwhile, Inca One has increased its production rate to in excess of 60 tonnes per day again for the time being, but shareholders should be warned it might be temporarily scaled back again during the upcoming holidays. That being said, we remain very confident 2016 will be ‘the’ year for Inca One as Chala One is ready to hit the ground running.
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The author holds a long position in both Standard Tolling and Inca One Gold. Inca One is a sponsor of the website. Please read the disclaimer
