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Gold/Mining/Energy : Royal Oak-RYO -- Ignore unavailable to you. Want to Upgrade?

To: Little Joe who wrote (635)	1/15/1998 6:05:00 PM
From: roger fontaine	Read Replies (2) \| Respond to of 1706

Witte reveals sale of big Royal Oak stake Disclosure comes as miner enters crucial stage in refinancing talks Thursday, January 15, 1998 By Allan Robinson Mining Reporter Margaret Witte, founder and driving force behind cash-strapped Royal Oak Mines Inc. , has disclosed that she has sold half of her stake in the mining company just as the gold producer is reaching a crucial stage in refinancing talks. Royal Oak, a Canadian-registered company based in Kirkland, Wash., said yesterday that negotiations are continuing between the company and its unsecured creditors over the approval for it to use $44-million (U.S.) raised in new senior secured note financing. The financing has closed and the cash is being held in escrow. But for Royal Oak to lay its hands on the money, it needs the consent of holders of 51 per cent of the aggregate amount of senior subordinated notes issued on Aug. 15, 1996. The gold miner has completed 82 per cent of the $430-million (Canadian) Kemess copper and gold mine in northern British Columbia. But with the plunge in gold prices, Royal Oak needs additional money for the project. The mine is scheduled to start up in April. Bond traders say it is not unusual for unsecured creditors in such circumstances and financial restructurings to demand "consent payments" or to use their negotiating leverage to obtain security. Mining industry sources say the talks between Ms. Witte, the chairwoman, chief executive officer and president of Royal Oak, have been tough. On Jan. 8, Royal Oak said "that this consent process will take no more than 10 days," which suggests that the talks should be completed by the end of the weekend. Royal Oak has said that once approval is obtained, the money will "immediately be available to Royal Oak for use at the Kemess project and for general corporate purposes." Royal Oak spokesman Graham Eacott refused to comment yesterday on the status of the talks, other than to say they are continuing. Mr. Eacott said Ms. Witte was forced to sell half of her shares in Royal Oak because of a margin call. In a filing with the U.S. Securities and Exchange Commission last week, Ms. Witte reported that she had sold 1,266,667 shares at a price between $1.02 (U.S.) to $1.30, from Dec. 2 to Dec. 5, bringing her holdings down to 1,287,109 shares. Margin calls are, in effect, a demand for loan repayments made by brokers. The shares act as security for the loans, allowing the investor to buy more shares. But when share prices fall, stockbrokers demand more cash to cover the loans and some times this forces investors to raise cash by selling their shares. Yesterday, Royal Oak shares fell 7 cents (Canadian) to $1.93 on the Toronto Stock Exchange. The shares had reached a 52-week high of $5 on March 20. During 1996, Ms. Witte's compensation package, which included a special bonus of $950,000 (U.S.), totalled $1.7-million. The compensation package for 1997 has yet to be disclosed. The company attributed the bonus, among other reasons, to her ability to raise $175-million of 11-per-cent senior subordinated notes to help complete the construction of the Kemess project. Royal Oak estimates that in 1998, it will produce approximately 343,000 ounces of gold at an estimated cost of $240 an ounce from the new Kemess mine and at its operations in Timmins, Ont., and Yellowknife. Gold closed yesterday at $281.90 an ounce.