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Gold/Mining/Energy : Royal Oak-RYO
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To: Elizabeth Andrews who wrote (1483)11/20/1998 8:03:00 PM
From: Thomas P. Talbot  Read Replies (2) of 1706
 
In contact with RYO: FYIE Kemess is now producing approximately 800 ounces of gold per day at a cash cost ranging between 125-150 per oz. Gold recoveries per the company are running at roughly 68-74% for gold and 78-82% for copper. All of this is within expectations, so at least we know Kemess is operating as projected. The key according to the company is financial restructuring which will improve the cash flow situation and apparently, according to the company, substantial progress has been made down this path. Of course,lower gold prices make it more difficult and higher will help. Losses from hedging ie 26 million must be repaid in 1999, this I believe is non recurring so if they can refinance and gold remains stable to higher, the prospects would appear to look decent beyond 1999. I detected a certain level on confidence in the speaker have called back with other questions though no response yet, though hopefully they are busy with the debt restructuring. The speaker also stated that bankruptcy was not an option. I am hopeful of some sort of convertible preferred issuance with unexpiring call warrants attached with a future high dividend once certain levels of operation have been achieved. This may be very attractive as this company has alot of potential if the debt burden is lessened significantly. In sum, the debt holders would be better off in such a situation as it appears Kemess is excellent and Fiji is very promising.
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