Placer Dome’s output rises 46% in quarter

First-quarter gold production for Placer Dome increased by 46% (TSE) to 337,000 oz., compared with 230,000 oz. in the comparable year-earlier period. New mines not in production a year ago added 120,000 oz. to the company’s gold output. However, consolidated net earnings declined to $35.1 million (15 cents per share) from $37.8 million (16 cents per share) in 1989. Net earnings in the year-earlier period included $2.3 million from discontinued oil and gas operations which are being sold.

Quarterly sales revenues from mining operations rose to $265.5 million from $203.9 million in 1989. Gold sales were $176 million at an average realized price of US$436 per oz., taking into account revenue from forward contracts. Gold earnings of $25.9 million were $8.3 million higher, due to a 3% increase in the realized price of gold and contributions from new mines.

Earnings from other metals at $7.2 million were $8.8 million lower than a year ago because of lower copper, silver and molybdenum prices.

The company’s average cash cost of gold production in the quarter was US$254 per oz., or 9% lower than a year ago, due to lower-cost production from new mines and increased output at the Campbell and Kidston mines.

The Dome mine experienced operating difficulties associated with the crushing plant, as well as lower grades and increased operating costs. A legal strike began at the Dome mine on May 7, following collective bargaining and mediation.

The company’s Big Bell and Detour Lake mines also experienced higher unit costs.

Placer’s 50% share of production at the Big Bell mine in Western Australia was lower than planned at 14,300 oz., while costs were US$438 per oz. Head grades have continued to be lower than expected and the hardness of the rock has necessitated increased drilling and blasting. A complete review of the mine is under way and will reach completion in the second quarter. The Granny Smith mine, also in Western Australia, started production in the quarter, contributing 26,500 oz. of gold at a cash cost of US$134 per oz.

In Chile, the second stage of plant construction is well advanced at the La Coipa gold-silver mine where production was 3,800 oz. gold and 66,000 oz. silver. The company terminated its agreement to complete a feasibility study on the Omai deposit in Guyana after deeming the project marginal at current gold prices.

Elsewhere, at the Misima mine in Papua New Guinea, production was 89,700 oz., its highest quarterly output since operations began, at a cash production cost of US$177 per oz. Milling operations for the quarter exceeded design capacity by 10%. Construction of the Porgera mine, in Papua New Guinea, is on schedule for a start of operations in the third quarter, the company says. Placer Dome (TSE) $000s except per-share items* Quarter ended Mar. 31 1990 1989 Revenue $299,900 $230,400 Net earnings 35,100 37,800

per share 0.15 0.16004