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Gold/Mining/Energy : Medinah Mining Inc. (MDHM) -- Ignore unavailable to you. Want to Upgrade?

To: findstock who wrote (5812)	8/28/1998 2:28:00 PM
From: EtTuBrute	Respond to of 25548

Some interesting news. Another player in the Andacollo: S&P Afms Rtgs on McWatters Mining Re:Acquis of Minorca NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/27/98-- Standard & Poor's today affirmed its single-'B'-plus corporate credit, senior unsecured debt, and bank loan ratings on McWatters Mining Inc. following the announcement of its share for share takeover of Toronto-based Minorca Resources Inc. (unrated). The outlook is stable. McWatters will issue 7.82 million common shares (net). In return, McWatters will receive the assets of Minorca which currently include $8.8 million in cash, a 15% interest in Dayton Mining Corp. [AMEX:DAY - news], and other investments in various small gold exploration companies. McWatters will also gain the rights granted to Minorca by Placer Dome Inc. [NYSE:PDG - news] regarding its shares in McWatters. The transaction is expected to close in October 1998, subject to various closing conditions including shareholder and regulatory approvals. While the transaction is not expected to impact the operations of McWatters, it will broaden shareholder base and increase financial flexibility. The ratings reflect McWatters' higher-than-average cost position and its lack of a financial track record. McWatters has two operating underground gold mines, Sigma and Kiena, located on the Abitibi Greenstone Belt in Quebec. It purchased the mines in September 1997, along with some exploration properties, for US$55 million. The company's proven and probable ore reserves stand at 1.1 million ounces of gold and its annual production for 1998 is projected at about 183,000 ounces. McWatters has a two-year C$23 million planned capital expenditure program with the goal to reduce its average cash cost to US$239 per ounce from US$258 per ounce in 1997 and to extend mine life to about 10 years from the current somewhat limited six years. As with any company in the industry, McWatters also is subject to the inherently high operating risks of mining. The company has a moderately aggressive financial policy and a very brief financial history. Over the next several years, profitability as measured by return on permanent capital is expected to average in the 4.0%-7.0% range. Funds from operations to total debt should average between 15% and 20%, helped by moderate debt leverage. Total debt to capitalization is expected to remain in the low-30% area, with the result that pretax interest coverage and cash flow interest coverage should average greater than 1.25 times (x) and 3.5x, respectively. However, all financial measures are highly sensitive to the price of gold which is currently very low. The company's hedge position which covers 75% of 1998 production at US$280-$290 per ounce offers some downside protection. In addition, McWatters as a Canadian gold producer is currently benefiting from the low exchange rate of the Canadian dollar versus the US dollar. Financial flexibility is limited based on a cash balance of C$5.95 million as of June 30, 1998 and a US$10 million secured revolving credit facility. Financial flexibility should, however, improve modestly following the closing of the takeover of Minorca. OUTLOOK: STABLE McWatters' operating experience and moderate capital requirements for improving its cost position should allow it to weather the continuing difficult industry conditions, Standard & Poor's said.---CreditWire