Cardero shareholders rush for exits after creditors allege default

Cardero Resources Corp (TSE:CDU) lost 15% on Monday on much higher than usual trading volumes, after creditors of the company alleged it is in default.

By midday the Vancouver-based explorer, which is advancing a met coal project in British Columbia and also has some iron ore assets, was trading down 15.4% at $0.055 on the Toronto big board, at its lowest for the day.

Around 1.6 million shares in the $6.2 million company had changed hands by 12:30 pm EST compared to the daily average of just 19,100. The counter has been decimated this year with market value lossed in excess of 80%.

Luxor Capital Group, holders of Cardero's senior secured notes, issued a demand for payment of $5.7 million due by August 5.

Luxor says the company failed to pay legal costs of $48,000 incurred by Luxor in connection with the notes.

Cardero is disputing whether it was provided proper notice to pay the legal fees and argues there has been no default and that payment of the legal fees has been made.

Cardero also said that it is engaged in advanced negotiations to secure financing to repay the Luxor, and it anticipates receiving a term sheet shortly, with a view to completing the financing prior to August 5.