| 8 June 2012 - S&P rates Allied Nevada and expects 'favorable pricing' ahead for gold and silver |
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S&P rates Allied Nevada and expects 'favorable pricing' ahead for gold and silver By Dorothy Kosich from http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=152880&sn=Detail&pid=102055 RENO (MINEWEB) - In an analysis published Thursday, Standard & Poor's said they expect gold and silver producers, including U.S.-based Allied Nevada Gold Corp. "to benefit from favorable pricing over the next two years, albeit at levels likely below recent cyclical highs." S&P assigned its "B" corporate credit rating to Allied Nevada Gold with a stable outlook. The credit ratings agency also assigned a "B" issue-level rating to the company's C$400 million senior unsecured notes due 2019. Allied Nevada will use proceeds from the proposed notes to fund a portion of its US$1.2 billion Hycroft Mine expansion program near Winnemucca, Nevada. The staged expansion will involve: increasing the mining rate to 80 million tpd in 2012; acceleration of the gyratory crushing project to improve heap leach recoveries with no increase to overall initial expansion capital; and construction of a 130,000 tpd mill to process transitional and sulfide material. The crusher will be operational by mid-2013, while the mill is expected to come on line in late 2012. Initial capital for the expansion projects is expected to be US$1.2 billion. "Our corporate credit rating on Allied Nevada reflects our view of the company's business risk as ‘vulnerable' and its financial risk as ‘aggressive'," said S&P credit analyst James Fielding. "Weaknesses include the company's reliance on a single operating mine, exposure to volatile previous metals prices, and very high capital needs related to the company's aggressive mine expansion plans." "In our view, current favorable prices for gold and silver as well as Allied Nevada's significant proven and probable reserves offset these risks," said S&P. "Our stable outlook reflects our view that note proceeds and project operating cash flow will provide adequate liquidity, based on our expectation for gold prices in a range of $1,400 to $1,500 through 2012." S&P said an upgrade of Allied Nevada's credit rating is unlikely over the next year, "given the company's substantial capital needs and the potential risks associated with a mine expansion program that we view to be aggressive. However, we could raise our rating in the next two to three years if gold prices remain favorable and if it appears that it complete its mine expansion plans on time and on budget." Nevertheless, S&P cautioned it could also lower the rating "if the mine expansion projects experience substantial delays or cost overruns." YUKON-NEVADA TO PROCESS HYCROFT CARBON In an unrelated development, Allied Nevada announced Thursday that it has entered into an arrangement with Yukon-Nevada Gold to process Hycroft gold and silver-laden carbon in Yukon-Nevada's carbon plant at the Jerritt Canyon milling facility located in Elko County, Nevada. Yukon-Nevada COO Randy Reichert said, "We will process this material under a tolling arrangement. Revenues from this arrangement will be credited against operating costs. Normal gold production from the Smith Miner, SXX/Steer Mine and from stockpiles will continue as usual at the Jerritt Canyon milling facility for the duration of the agreement." Hycroft currently generates approximately 15 to 20 tons of carbon monthly. At the end of April, Hycroft had 162 tons of carbon containing 13,300 ounces of gold and 36,099 ounces of silver. The company plans to ship the first lot of carbon in early June. Source : http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=152880&sn=Detail&pid=102055 |
