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

To: Joe King who wrote (1620)	2/16/1999 10:51:00 PM
From: roger fontaine	Respond to of 1706

For Tuesday, February 16, 1999 Royal Oak wins approval for smaller bailout By KEITH DAMSELL AND JOHN SCHREINER The Financial Post TORONTO -- Royal Oak Mines Inc. has won court protection from creditors but will receive only a fraction of the funds it hoped to secure to stay in business. "We're really very pleased," said David Baird, Royal Oak lawyer. Under terms of the Companies' Creditors Arrangement Act, Royal Oak will receive $8.4-million (US) to finance the next four weeks of its operations. Royal Oak, which is based in Washington state, had asked the court to approve $34.7-million (US) in emergency funds pledged earlier yesterday by Trilon Financial Corp. of Toronto. But lawyers representing three banks owed a total of $33.3-million (US) as a result of the company's unsuccessful gold-price hedging program objected to the lack of detail in Royal Oak's financial plan filed with the court. In addition, Sean Dunphy, a lawyer representing McQuarrie Bank Ltd. of Australia and Bankers Trust Co. of New York, questioned the ability of Royal Oak's management to solve the company's current financial difficulties. "From our perspective, the jury is still out," said Mr. Dunphy. "We remain quite nervous about the status of our collateral." Robert Blair, Ontario Court judge, agreed. He said in his preliminary ruling that "there is some justification for the call to caution." For Royal Oak to receive further funds, a detailed budget must be presented to the court on Feb. 26. Trilon Financial, which also participated in a bailout of Royal Oak last year, is expected to approve the reduced funding package dictated by the court. As reported yesterday in the Financial Post, the cash injection will enable Royal Oak to stave off a B.C. government order to suspend production at the Kemess South gold/copper mine until deficiencies in tailings dam construction are made up. Last week, Royal Oak persuaded the government to extend the original Feb. 10 deadline for stopping production at Kemess and it filed its work plans to bring the height of the dam in compliance with provincial requirements. The government's new deadline is noon tomorrow, with the government looking for assurance new cash would be available to Royal Oak from Trilon. Trilon has first claim on Kemess, Royal Oak's premier producing asset, as a result of lending it $120-million (US) last June when Royal Oak ran out of money while completing the $480-million mine in northern British Columbia. Kemess has been in production since May, but teething problems have prevented it from reaching full production. On Nov. 4, Royal Oak said the mine had produced 51,900 ounces of gold and 15.2 million pounds of copper in concentrate since May. No figures have been released on subsequent output, but a January lawsuit by Royal Oak against an equipment supplier disclosed there had been production shortfalls. The mine is designed to produce 250,000 ounces of gold and 60 million pounds of copper a year. Margaret Witte, Royal Oak's president and chief executive, said yesterday "the additional working capital . . . will allow Royal Oak to resume full production levels at Kemess South." In seeking bankruptcy protection, Royal Oak sought a one-month stay of all legal proceedings. The company said it intended to present a restructuring plan to the court within three months. PricewaterhouseCoopers has been named as monitor while Royal Oak named a court-approved advisory committee consisting of investment banker Joseph Wright and mining engineer Norman Ross.