Allied Nevada Gold (NYSEMKT: ANV) has been among worst performers in the gold mining sector, along with bigger companies like Alamos Gold (NYSE:AGI), which is suffering from project permit delays, and Yamana Gold (NYSE:AUY), whose acquisition of Osisko Mining was negatively met by the market.

Allied Nevada Gold has its own reasons for underperforming. The company is experiencing technical difficulties at its sole mine and has no money for its expansion project.

Lawsuits filed against the company
During the first quarter earnings call, Allied Nevada Gold stated that the start-up of the crushing facility at its Hycroft mine has been a disappointment. In fact, both primary and secondary crushing units have suffered production delays due to engineering issues with these units. What's more, the company was not able to give a definite date for the final solution for these crushers.

Allied Nevada Gold difficulties attracted the attention of several law firms that specialize in securities litigation. In the filed class action lawsuits, the company is accused of understating operating difficulties and underestimating challenges with the Hycroft mine mill expansion.  It's too early to say who will win this legal battle, but it will surely add to Allied Nevada Gold's headaches.

No liquidity problems in the near term
In the meantime, the company is making ends meet. This year, Allied Nevada Gold expects capital spending of $87 million, debt repayments of $53 million, and interest expense of $44 million. The company finished the first quarter with $49 million of cash on the balance sheet and generated $23.8 million of operating cash flow.

What's more, the company was able to increase the size of its revolving credit facility from $40 million to $75 million. Notably, Allied Nevada Gold holds $51.5 million on the balance sheet classified as assets for sale. Considering all these facts, there's no liquidity crisis ahead for the company in the near term.

Allied Nevada Gold lacks money for expansion project
Even if Allied Nevada Gold solves its technical problems fast, the main challenge remains. The company has no money for the Hycroft mill expansion project. During the first quarter earnings call, Allied Nevada Gold was asked whether it was considering selling itself to maximize shareholder value. The answer was no. Allied Nevada Gold stated that it was looking for a partner rather than considering a sale.

At the beginning of the year, a company called China Gold Stone Mining Development announced a $7.50 per share offer for Allied Nevada Gold. Allied Nevada Gold responded that it was questioning the credibility of the proposal. In fact, soon after this announcement China Gold Stone stated that this proposal was published in error. The whole story looks mysterious, but it did put the prospects of an Allied Nevada Gold sale on the radar.

It seems like big players currently favor good mining deposits in safe jurisdictions. The bidding battle for Osisko Mining, which was won by Yamana Gold and Agnico Eagle Mines, highlighted this trend. That said, major miners Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:GOLD), which have a strong presence in Nevada, could have considered additional assets in the area.

Bottom line
While Allied Nevada Gold states that it is not considering putting itself up for sale, such a possibility exists in the longer term. With that in mind, the company might be attractive at current levels for investors who can tolerate risk.