Production drops but Placer posts profit

Vancouver — Historically low gold prices continued to plague producers as Placer Dome(PDG-T) saw its profits tumble in the first quarter of 2001.

“Despite a further 9% reduction in the gold price since the first quarter of 2000, we have maintained strong mine operating earnings and cash flow from operations,” says Jay Taylor, Placer’s president.

The major, which has mines in 15 countries, posted earnings of US$16 million, or US5 per share, during the quarter ended March 31. This marks a considerable drop from the US$29 million, or US9 per share, tabled in the corresponding period of last year. Revenues slumped to US$341 million during the recent quarter, down from US$383 million in the first quarter of 2000.

Impacting the company’s bottom line were adjustments on metals options and foreign currency forward-and-option contracts amounting to US$19 million. Excluding these charges, Placer earned US$35 million, or US11 per share, compared with US$49 million, or US15 per share, in the same period in 2000.

The company cranked out 694,000 oz. gold in the quarter at a cash cost of US$163 per oz. This was a significant drop from 786,000 oz. at a cash cost of US$151 per oz. a year earlier.

The decline is attributed to a 44% decrease in production at the Granny Smith operation in Australia, a 42% drop at the Misima mine in Papua New Guinea and a 41% decline at the Campbell mine in Ontario.

One of the few bright spots in Placer’s gold operations was the South Deep mine in South Africa. It saw a 21% jump in production. This was due to higher grades.

Combined copper production from the Zaldivar mine in Chile and the Osborne operation in Australia hit 100 million lbs. for the quarter. Total costs came in at US58 per lb. In the same period last year, the operations cranked out 107 million tonnes copper at total costs of US64 per lb.

Despite the drop in earnings, the company remains confident that it will meet its projected 2001 cash flow and mine operating earnings targets of US$400 million.