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Nevada company granted gaming license27 January 2012
Robert Sturges, president and CEO of Nevada Gold, said the company invested $26,000 to buy a 1 percent stake in the Reno casino. He said Nevada Gold was now in a position to evaluate other acquisitions and management opportunities in Nevada.
"This was not an investment for growing our business," Sturges told the five-member commission. "It was an agreement ... so we could acquire our Nevada gaming license."
Gaming regulators also licensed Nevada Gold's subsidiary, Nevada Gold Speedway LLC.
Sturges said the company established a Las Vegas office about nine months ago, but it was a "difficult task to get much done" without being licensed. Sturges said the company "could get much more active" in the acquisition of locals-oriented casinos and management of properties.
He said Nevada Gold was in negotiations for a small equity stake and a management contract on a proposed hotel and casino at the Las Vegas Motor Speedway. The $60 million project would include a 200-room hotel and a 30,000-square-foot casino on a parcel next to the Petro Truck Stop, adjacent to the speedway. The property's original owner lost control of the site to Lennar Corp. and several banks, he said.
William Sherlock, chairman of Nevada Gold, said he expects to wrap up "negotiations in the near future." He declined further comment.
Messages left with Lennar in Miami and Jeff Motley at Las Vegas Motor Speedway were not returned.
Houston-based Nevada Gold originally was a mining company with a significant presence in Nevada. Sturges said the company sold off its mining and nongaming business interests to concentrate on gaming.
Nevada Gold owns and operates 11 gaming properties in South Dakota and Washington state.
The company recently sold its Colorado Grande Casino for $3.2 million to acquire the gaming assets of a South Dakota-based slot operator.
On Tuesday, the South Dakota Commission on Gaming approved the company's gaming license, which was necessary to move forward with acquisition of AG Trucano, Sons & Grandsons Inc.
Sturges told Nevada gaming regulators Thursday the deal was expected to close "very soon."
Nevada Gold purchased AG Trucano for $5.2 million in October, and it needed a South Dakota gaming license to close the deal. AG Trucano operates more than 900 slot machines, or 24 percent of the slot business in Deadwood, S.D.
Sturges said the company financed the purchase by selling 2.6 million of the company's shares, raising $20 million.
"We continue to believe that the acquisition of AG Trucano is a very attractive opportunity for Nevada Gold," Sturges said. "The approval for a gaming license ... is one of the final steps before closing our pending acquisition."
The company owns 10 mini-casinos in Washington state, representing about 16 percent of the state's active mini-casinos, according to a company profile submitted to Nevada gaming regulators. Mini-casinos are restaurants with table games, including poker.
The casinos contributed 86 percent of revenues, or $47.9 million, last year.
In the first six months of fiscal year 2012, the company generated $25.5 million in net revenue, compared with $17.3 million for the same period last year.
Despite better revenues, Nevada Gold still reported a net loss of $2.1 million, or 16 cents a share, compared to a loss of $400,000, or 5 cents a share, in the second quarter of fiscal 2011.
Sturges said he was "disappointed" with the second-quarter financial results, but attributed them to primarily a "lower than expected hold percentage."
Nevada Gold's third quarter of fiscal 2012 closes Jan. 31.
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