49r--Echo Bay mines removed from S+P 500!!! And this>>
Echo Bay Mines Still on S&PWatch Re: Low Gold Prices
NEW YORK,-- Standard & Poor's double-'B'-minus corporate credit and
single-'B'-plus junior subordinated capital securities ratings on Echo Bay Mines Ltd. remain on
CreditWatch with negative implications, where they were placed Dec. 5, 1997.
This CreditWatch update follows the announcement on Jan. 6, 1998 of a series of actions taken
by Echo Bay Mines in response to continued low gold prices which recently sunk to the extremely
low level of $280 per ounce -- an 18-year low. Such actions include:
A suspension of operations at the Lupin gold mine in the Northwest Territories,
A scaling back of operations at McCoy/Cove gold and silver mine in Nevada,
A reduction in capital expenditures, and
A $14 million charge to cover the costs of the cutbacks.
Ratings were originally lowered and placed on CreditWatch reflecting the deterioration and
heightened risk in the company's credit profile, brought about by dramatic drops in gold prices,
which resulted a $310 million asset writedown in the third quarter of 1997.
While management is taking these actions to lower costs and conserve cash, projected 1998 cash
operating costs of $240-$250 per ounce remain moderately high given current gold prices. In
addition, Echo Bay's financial profile is marked by diminishing financial flexibility and continued
lack of profitability. Standard & Poor's will reassess the company's operating and financial
strategies in the context of industry conditions. |
