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Gold/Mining/Energy : Inco-Voisey Bay Nickel [ T.N.V] -- Ignore unavailable to you. Want to Upgrade?

To: Winer who wrote (238)	5/5/1998 11:35:00 AM
From: 1king	Read Replies (1) \| Respond to of 1615

Winer, Thanks for the info. Back at yah........ FOR: STANDARD & POOR'S MAY 1, 1998 RE: Inco's Outlook Revised To Negative By S&P;Rtgs Afmd TORONTO, ONTARIO--Standard & Poor's CreditWire 5/1/98 - Standard & Poor's today revised its outlook on Inco Ltd. to negative from stable. At the same time, Standard & Poor's affirmed its triple-'B'-minus senior unsecured debt and corporate credit ratings on the company. The outlook revision reflects concern over the low nickel price at this point in the cycle and the delays and uncertainty in the development of the Voisey's Bay nickel-copper-cobalt deposit in Labrador. If the nickel price remains at this low level for an extended period or the outcome of Inco's review of the Voisey's Bay project adversely impacts the company's financial performance, the ratings could be lowered. The ratings reflect Inco Ltd.'s position as one of the world's largest and lowest cost integrated nickel producers with a high degree of exposure to volatile nickel prices and a moderate financial policy. Inco acquired Diamond Fields Resources Inc. for $3.1 billion in August 1996, giving it 100 percent ownership of the Voisey's Bay nickel-copper-cobalt deposit in Labrador, which should secure its future business position as the dominant low-cost nickel producer. The Voisey's Bay project is expected to produce 270 million pounds of nickel, 200 million pounds of copper, and six million pounds of cobalt annually, with a net cash cost for nickel of well under $1.00 per pound versus the current world average of about $2.15 per pound. Production from Voisey's Bay, together with the current expansion at 59 percent-owned P.T. International Nickel Indonesia (P.T. Inco), is projected to raise Inco's annual nickel capacity to 750 million pounds from the current 430 million pounds by the year 2002, equal to about 30 percent of projected world capacity. However, as with all large mining projects, there are significant development risks which could alter the outcome. The nickel industry, driven by demand for stainless steel, is cyclical and subject to high price volatility. Consequently, Inco's financial track record has varied widely, and Standard & Poor's expects this will continue to be the case. Over the past three years, profitability as measured by return on permanent capital has ranged from a low of 2.8 percent to a high of 17 percent, averaging 9.4 percent which is subpar for the rating. Pretax interest coverage has ranged from 1.6 times (x) to 6.2x, averaging 4x. Over the next several years Inco faces substantial capital expenditures including the $580 million expansion at P.T. Inco and an estimated $1.4 billion to develop the mine, mill, smelter, and refinery for Voisey's Bay. Debt leverage has declined from the high 30 percent area to 25 percent as of Dec. 31, 1997, due in part to the large equity issuance for the acquisition of Voisey's Bay. Although debt levels are expected to increase over the next several years as the company pursues its capital spending initiatives, debt leverage is not expected to rise above the moderate mid-30 percent area. As a result, Inco's interest coverage measures throughout the next cycle should be more consistent with the rating category. --- CreditWire.