Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (56723)	7/26/2000 8:53:57 PM
From: Roebear	Read Replies (2) \| Respond to of 116815

heinz, Heard rumors of a holocaust settlement that would effect POG positively announced after US mkt close. No time or energy left today to search for it, perhaps you or someone here has heard of it, if so please post. thanks, Roebear

To: pater tenebrarum who wrote (56723)	7/27/2000 7:47:51 AM
From: long-gone	Read Replies (1) \| Respond to of 116815

Moody's cuts Echo Bay Mines ratings (UPDATE: Press release provided by Moody's Investors Service) Approximately $100 Million of Debt Securities Affected. NEW YORK, July 26 - Moody's Investors Service downgraded its ratings for Echo Bay Mines Ltd. The downgrades consider Echo Bay's history of operating losses, negative equity under U.S. GAAP, relatively high cash operating costs, and depleting mines and short reserve life. Moody's lowered its rating for Echo Bay's 11% junior subordinated deferrable interest debentures due 2027 (capital securities) to C from Caa2. Echo Bay's senior implied and senior unsecured issuer ratings were both lowered to Caa3 from Caa1. The rating outlook remains negative. Echo Bay has deferred interest payments on its capital securities for 5 consecutive semi-annual periods. Unless gold prices improve, the company is likely to continue deferring interest on the capital securities over the next 5 semi-annual interest periods, the maximum allowed by the indenture. And without an increase in Echo Bay's realised gold price, Moody's believes there is a high probability the company will have to restructure the capital securities at the conclusion of the interest deferral period as its cash flow will be inadequate to service $11 million of annual interest. Echo Bay has recorded operating and net losses for the last five years. As a result, shareholders' equity, using U.S. GAAP, was negative $26 million as of March 31, 2000. Cash flow from operating activities less capital expenditures has also been negative for the last five years, despite the company's moves to conserve cash while it waits for gold prices to improve. Echo Bay's comparatively high cash operating costs, approximately $220 per ounce, are partly responsible for its poor results. Its cash costs will be lower in 2000 due to a lower strip ratio at the Round Mountain mine and temporarily higher gold and silver grades at the McCoy/Cove mine. Unless additional reserves are identified, two of Echo Bay's four operating mines, Kettle River and McCoy/Cove, will close within the next two years, reducing production and income and requiring expenditures for mine closure and reclamation. As a two-mine company producing around 420,000 ounces of gold a year at current prices, Echo Bay's revenue would be $120 million, which cannot support the $100 million of debt represented by the capital securities. In addition, the 2027 maturity of the capital securities is well beyond the life of Echo Bay's developed reserves. Proven and probable reserves at Echo Bay's largest mine, 50%-owned Round Mountain, indicate a mine life of about 10 years while the recently restarted high-cost Lupin mine has less than four years of proven and probable reserves, although the Lupin deposit and the Ulu satellite deposit are both open at depth. Echo Bay's short reserve life and lack of attractive development properties hurt the company in other ways. Most importantly, it limits the ability of the company to issue equity, enter into long-term hedges, raise new debt, or attract an acquiror. The dilemma for Echo Bay is that its undeveloped properties are marginal at today's spot gold price and would require significant capital to develop. A change in Echo Bay's prospects is therefore highly dependent on higher gold prices, a development that creditors should not rely on in Moody's opinion. Headquartered in Englewood, Colorado, Echo Bay Mines Ltd. had sales of $210 million in 1999. biz.yahoo.com