History
A former gold explorer turned oil and gas company, Rock Energy Resources returned to gold in 2011, then fell into loan default and lost its California oil interests by the end of 2012.
2007-2009: From gold to oil and gas
The company, then called Hanover Gold, sold all its mineral assets on March 8, 2007 to shareholders Roy and Marlene Moen for $400,000 cash, leaving it with no mineral assets. In December 2007 it agreed to buy substantially all the assets of Rock Energy Partners L.P., an oil and gas explorer, for 434,997,993 new shares, and issued 29,972,136 shares to two consultants, who were also paid $625,000 cash. Only 35,029,071 shares had been outstanding beforehand, so existing holders faced heavy dilution. The deal was reported complete in January 2008, making it a Houston-based oil and gas company with properties in Texas and California. Its accountants warned of going-concern doubt (whether it could keep operating), and it carried an accumulated deficit of $33,969,037 at September 30, 2007.
In California it held a 3.326% working interest in Santa Barbara County properties, plus an option to buy a further 16.674% for about $35 million. In June 2008 the options were reworked into two at $12,500,000 each, with deadlines in October 2008 and January 2009. The record does not say whether any was exercised. In September 2009 President Rocky V. Emery offered a credit line of up to about $8 million, but it depended on his own bank loan and the company could not assure it would close.
2010-2012: Gold, debt and default
The record is quiet for 2010 and most of 2011, though shares on issue rose from 76.5 million at the end of 2009 to 180.8 million at the end of 2011. The beats do not explain that rise.
In December 2011 the company bought HE-MAN LLC, whose main asset was a 49% interest in the Red Arrow gold mine in Colorado. HE-MAN secured a $25 million credit line from Maximilian Investors at 18% interest, guaranteed by Emery. The lender was to receive 18,865,520 restricted shares (9.9%), with a right to sell them back to the company at $0.20 each.
In August 2012 the loan was amended. With $4.2 million outstanding, defaults were waived, more advances were approved, and the lender's share of mine profits rose from 3% to 5%. The buy-back right was removed and its $3,773,104 value was added to the loan.
The subsidiary, renamed American Patriot Gold, LLC, then stopped paying interest and fees from October 1, 2012. With about $9 million borrowed, the company won forbearance (a pause on enforcement) through March 1, 2013 by transferring its Santa Maria Pacific interests, valued at over $3 million, to the lender. That ended its remaining oil and gas holding. It also fired Craig and Edwin Liukko for cause and sued them and partner Red Arrow Gold Corp., which it said kept about $90,000 of gold sale proceeds owed to the lender. As of February 2013, Mark G. Harrington was Interim CEO, the company was in default under the loan, and its reports were delinquent.
Written from the 8 story beats below (2007 to 31 Dec 2012), which come from the company's own announcements and filings.