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Gold/Mining/Energy : Int'l Pursuit (T.IPJ) -- Ignore unavailable to you. Want to Upgrade?

To: Ron Everest who wrote (506)	2/2/1998 6:35:00 PM
From: Abner Hosmer	Read Replies (1) \| Respond to of 835

Much appreciate your reasoned response, Ron. I guess the ongoing approval of cow's is a positive sign that the current govt will be carefull not to jeopardize foreign mining investment. But if IPJ does turn up a good deposit, I suppose we might expect to see the usual govt attempt to snag a sizeable piece of the action. We should be so lucky as to have that problem to worry about, I guess. Sounds like you are on target for March, and I am glad to hear it. I'm sure it will give you a great deal of pleasure, and hopefully profit, to have more time to focus on trading. It's also nice to think that perhaps you will have more time to share your experience and insight with us on the GPM thread. Your input is really appreciated! thanks again - Tom

To: Ron Everest who wrote (506)	2/2/1998 8:35:00 PM
From: Abner Hosmer	Read Replies (1) \| Respond to of 835

Ron - Oops, looks like I just posted simultaneously with you. Seems like Indonesia is heading inexorably towards a moratorium on private debt. This comes from a lengthy release from Moody's on Saturday. I don't wish to overemphasize the element of risk, just to take note of Moody's perspective: biz.yahoo.com e) Indonesian Metals & Mining Sector: The Indonesian metals and mining sector is being adversely impacted by the general economic problems of East Asia, as well as the particular challenges that Indonesia faces. There is significant uncertainty about the future level of metal consumption in the region, notably copper and nickel. The reversal of the formerly aggressive economic growth expectations of the East Asia region portends poorly for the basic infrastructure, residential and commercial construction, heavy industrial equipment, and automotive sectors in the region. Global copper and nickel-intensive stainless steel demand could therefore be significantly lower in the near to medium term. Given the sizeable supply increases expected for both copper and nickel by the early part of the next century, there could be price weakness for both commodities for the foreseeable future. The economic turmoil in Indonesia has increased the risks for non-Indonesian companies that own and operate mining assets in Indonesia, including the risk of restrictions on the repatriation of cash flow generated in Indonesia and the potential risk of expropriation. The credit ratings of mining companies with sizeable Indonesian operations incorporate these risks. The Indonesian exposures of Rio Tinto (quote from Yahoo! UK & Ireland: RIO.L; rating of Aa3), Newmont Mining Corporation (NEM - news; rating at Baa2), and Inco Ltd. (NYSE:N - news; N.TO - news; rating of Baa2) are diluted significantly by their substantial mining activities in other parts of the world. However, despite its high reserves and low-cost, state-of-the-art operations, Freeport McMoRan Copper & Gold's (FCX - news; FCX) -- senior debt rating of B2 -- has a significantly higher risk profile because its copper and gold mining activities are concentrated in Indonesia. Though the fundamental operating and financial profiles are stronger than a rating of B2 would normally warrant, the rated debt lacks the full complement of structured financing features necessary to exceed the Indonesian sovereign ceiling of B2. The rating is thus constrained by the ceiling. Moody's notes, however, that the existing structure is not affected by the partial halt in the payment of private sector debt, because first and foremost, FCX's operating subsidiary, PT Freeport Indonesia (PT-FI), has the ability to repay foreign currency debt and does not require relief. Secondly, FCX believes its Contract of Work with the Indonesian Government will continue to allow PT-FI to service foreign exchange debt even if the partial halt in debt payment escalates into a debt moratorium.