Placer profitable in 2002

Vancouver – Higher gold prices and a reduced hedge book helped thrust Placer Dome (PDG-T) well into the black during 2002, however, US$40 million of unforeseen charges during the fourth quarter sours profit margin.

Placer Dome tabled net earnings of US$116 million, or US$33 per share, on sales revenue of US$1.21 billion. This compares with a loss of US$133 million, or US$0.41 per share, on sales revenue of US$1.22 billion, in 2001.

Cash flow from operations over the year tallied to US$320 million, or US$0.92 per share, while mine operating earnings totalled US$324 million. The company reports that excluding the impact of its acquisition of Australian-miner AurionGold, the company reduced its forwards sales program by 20% to 6.9 million oz.

The company cranked out 2.8 million oz. of gold at cash an total costs of US$178 per oz. and US$231 per oz., respectively. In addition, 427 million pounds of copper were produced at cash and total costs of US$0.45 per lb. and US$0.58 per lb., respectively.

Proven and probable gold reserves increased by 19% over last year to 52.9 million oz. due to the acquisition of AurionGold. Also adding to the improvement was an increase in the gold price assumption to US$300 per oz. (used to calculate reserves).

Proven and probable copper reserves decreased 18% as a result of lowering the copper price assumption to US$0.85 per lb. as well as depletion.

Last year the corporation’s hedge program realized a US$32 per oz. premium over the average spot price of US$310 per oz. This added US$82 million to Placer’s coffers for the year. After integrating AurionGold’s hedge book, Placer’s maximum committed ounces rose to 12.6 million. This year, 77% of Placer’s forecast production of 3.5 million oz. is fully exposed to the gold price. The remaining 20% is committed at an average price of US$365 per oz. The major states that it plans to reduce its hedge position by at least 1 million oz. in 2003.

During the fourth quarter of 2002, the company tabled net earnings of US$6 million, or US$0.02 per share, on sales revenue of US$355 million, compared with net earnings of US$29 million ,or US$0.09 per share, on sales revenue of US$292 million, in the year earlier period. Cash flow from operations came in at US$47 million, up from US$43 million in the corresponding period of 2001 and mine operating earnings increased to US$83 million from the previous US$80 million.

Net earnings during the fourth quarter were hit with US$40 million worth of charges. Part of the money, US$12 million, went to pay for upgrading the facilities and infrastructure at the closed Equity Silver mine in BC, in order to handle extraordinary weather conditions and high-water run-off. Another US$12 million was spent on increased exploration activity particularly at the company’s Getchell, Cortez and Kalgoorlie mines. Placer also reports that US$14 million was spent on inter-company debt balances for the South Deep mine in Africa. A US$12 million pre-tax mark-to-market loss was recorded on a portion of AurionGold’s hedge book.

Production for the quarter weighed in at 917,000 oz. gold at cash and total costs of US$180 per oz. and US$241 per oz., respectively. This compares with 657,000 oz. gold a year earlier at cash and production costs of US$178 per oz. and US$235 per oz., respectively. The increase is attributed to the inclusion of two months of production from AurionGold’s assets.

Copper production during the quarter totalled 108 million lbs. at cash and total cash costs of US$0.47 per lb. and US$0.56 per lb., respectively. This compares with 111 million pounds at cash and total costs of US$0.46 per lb. and US$0.58 per lb., respectively, during the fourth quarter of 2001.

As a result of a change in accounting practices Placer states that it will have a one tome, after-tax charge of US$15 million to the earnings during the first quarter of 2003

Placer also declared a semi-annual dividend of US$0.05 per share payable on April 7, 2003 to shareholders of record at the close of business on March 7, 2003.