S&POutlook on Gold Companies Revised Due to Drop in Prices
NEW YORK--(BUSINESS WIRE)-- Standard & Poor's CreditWire 7/10/97 -- Reflecting the
recent weakness in gold prices, coupled with the possibility of a sustained period of weaker prices,
Standard & Poor's has revised its outlook on various companies as follows:
New Former
CCR* Outlook Outlook
Newmont Gold Co. BBB+ Negative Stable
Newmont Mining Corp. BBB+ Negative Stable
Homestake Mining Co. BBB Negative Stable
Placer Dome Inc. BBB Stable Positive
Battle Mountain Gold Co. BB Negative Positive
Echo Bay Mines Ltd. BB Negative Stable
Coeur D'Alene Mines Corp. B+ Negative Positive
*CCR--Corporate credit rating.
Gold prices have been temporarily affected by recent central bank actions, falling to the current
price of $318 per ounce, which is near a 12-year low. Yet, Standard & Poor's expects that longer
term market fundamentals should support a strengthening of prices to previous levels in the
mid-$300 per ounce area. However, Standard & Poor's cannot ignore the possibility that the
recent drop in gold prices could be prolonged and, hence, adversely impact the credit quality of the
above companies.
Additionally, Standard & Poor's has affirmed its ratings and outlooks on the following companies
for various reasons as stated:
Barrick Gold Corp. (single-'A' CCR, stable outlook), given its significant hedge position and
substantial financial flexibility, including a large cash position.
Teck Corp. (triple-'B' CCR, stable outlook), given its low gold cash production costs,
product diversification, and significant financial flexibility.
Freeport-McMoRan Copper & Gold Inc. (triple-'B'-minus CCR, stable outlook), given its
product diversification and low gold cash production cost.
Amax Gold Inc.. (double-'B' CCR, stable outlook), given its relationship with 59%-owner
Cyprus Amax Minerals Co. (triple-'B'-minus CCR, positive outlook) and its recent success
with certain low-cost development projects.
Agnico Eagle Mines Ltd. (single-'B'-plus CCR, stable outlook), given its competitive cost
structure, aided by copper by-product credits, and its adequate financial flexibility derived
from its cash position and recent equity issue.
Hecla Mining Co. (single-'B'-plus CCR, stable outlook), as its product diversification
affords some protection against gold price volatility and its financial flexibility is expected to
remain consistent with its current rating.
Royal Oak Mines Inc. (single-'B'-plus CCR, negative outlook), since its negative outlook
already underscores the challenges it faces, although lower gold prices could well further
hinder assumed improvement in its financial performance. -- CreditWire |
