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Gold/Mining/Energy : Highwood Res. Ltd (T.HWD, HIWDF) -- Ignore unavailable to you. Want to Upgrade?

To: kidl who wrote (98)	2/15/1999 10:22:00 AM
From: kidl	Read Replies (1) \| Respond to of 147

Related news: For Monday, February 15, 1999 Royal Oak to file for bankruptcy protection Move buys miner time: Lenders could have seized Kemess gold/copper project By JOHN SCHREINER The Financial Post VANCOUVER -- Royal Oak Mines Inc. will file for court protection from its creditors this morning in the Ontario Court of Justice after negotiating for two months to restructure its debts. Sources close to the firm said the filing is necessary for technical reasons: it will facilitate injecting fresh working capital into a company that has run out of cash. The capital is expected to be injected by Trilon Financial Corp. of Toronto, which came to Royal Oak's rescue last year with a $120-million (US) loan to enable it to complete its over-budget Kemess South gold copper mine in British Columbia. The expected presence of Trilon as a lender again suggests some progress was made working out new debt arrangements with Royal Oak's lenders. Just before Christmas, the company set itself a Feb. 15 deadline to achieve "consensual" restructuring of its debts. Its senior debt totals about $335-million (US) and it also owes $43.6-million in taxes, payroll, and trade debts. The court order that Royal Oak is seeking will stay all legal proceedings until March 18, so that the firm can prepare a plan for arrangement to deal with its liabilities while keeping Kemess in operation. The company believes that once Kemess is operating smoothly, it will be able to replace its current debt with lower-cost and longer-term conventional mine financing. Without a court-ordered standstill, Trilon and an associated merchant banker, Northgate Exploration Ltd., have the power to begin taking over the Kemess South gold copper mine in northern British Columbia. This is Royal Oak's most critical asset, promising 16 years of production at costs of less that $150 (US) an ounce. Developed at a cost of $480-million, Kemess was $50-million over budget. When Royal Oak ran out of money last spring, it turned to Trilon and Northgate for last-resort financing of $120-million (US). It blamed "historically low" gold and copper prices when it said on Dec. 23 that its debts needed to be renegotiated to provide "greater financial flexibility and a stronger balance sheet." Servicing Trilon's and Northgate's aggressive repayment terms required a problem-free startup for the mine, which was declared in commercial production on Oct. 2. That has not been the case. In its statement of claim, Royal Oak said equipment problems caused "ongoing production losses due to diminished gold and copper recoveries, ongoing increased maintenance costs and increased production costs."