Fitch Revises ENAMI's 'A-' FC Rating Outlook to Positive.

Business Editors

CHICAGO--(BUSINESS WIRE)--Feb. 3, 2004

Fitch Ratings has revised the rating Outlook on the senior unsecured foreign currency rating of Empresa Nacional de Mineria (ENAMI) to Positive from Stable. Fitch has also affirmed ENAMI's 'A-' long-term foreign currency rating and the 'A+' senior unsecured local currency (Chilean peso) rating. The Rating Outlook of ENAMI's local currency rating remains Stable. The ratings reflect the explicit and implicit support the company receives from the Chilean government.

This rating action follows yesterday's change to Positive from Stable in the Outlook of Fitch's 'A-' long-term foreign currency rating of the Republic of Chile. Fitch also affirmed the 'A+' local currency rating of the Republic of Chile.

ENAMI's 'A-' foreign currency rating applies to the company's US$220 million three-year syndicated bank loan that closed Dec. 31, 2002. The loan carries a full and unconditional guarantee from the Republic of Chile whose long-term foreign currency obligations are also rated 'A-'.

The ENAMI ratings also represent the credit quality of all debt at ENAMI, including debt that does not carry an explicit government guarantee. Fitch does not differentiate between the debt with and without the explicit government guarantee due to a letter from the government to the unsecured lenders, in which the government expresses its intent to support these loans and states that it does not consider them subordinate to the syndicated loan. Fitch believes that the Chilean government will honor this implicit commitment to ENAMI's lenders due to the negative externalities that would arise from a default by ENAMI.

ENAMI's financial leverage remains high. Since 1994, the company's total debt (including non interest-bearing debt) has grown to approximately US$500 million from about US$250 million, mainly as a result of the capital expenditures made to adhere to stricter environmental standards and the cumulative, dividend-like advances on earnings made to the Chilean government. The company's ratio EBITDA to interest expense has remained low, between 1 times (x) and 2x over the last several years.

ENAMI is wholly owned by the Chilean government and provides copper smelting and refining services to small to midsized mining operations. ENAMI supports these companies by providing price-stabilization programs, loans, and technical and marketing assistance. In 2003, ENAMI registered sales of 213,000 tons of electrolytic copper, that together with sales of copper concentrates, gold, silver, sulfuric acid and smelting and refining services, generated total revenues of US$607 million.