Vancouver — A strong second quarter augurs well for
The major cranked out 747,000 oz. gold during the 3-month period at a cash cost of US$151 per oz. and a total cost of US$231 per oz. In the corresponding quarter of 2000, production totalled 715,000 oz. at US$163 and US$230 per oz., respectively.
Placer netted US$33 million in earnings (or US10 per share) on sales revenue of US$302 million, compared with a year-ago loss of US$71 million (US22 per share) on revenue of US$350 million. Earnings from mine operations in the recent quarter amounted to US$89 million; cash flow from operations, US$101 million.
“Despite the fact that the price of gold and copper were both down in the first six months of the year, quarter to quarter, the financial health and flexibility of our company is improving,” says Placer President Jay Taylor. “We continue to execute a disciplined investment strategy on projects we believe will strengthen our bottom line.”
This strategy has attracted the company to the Pueblo Viejo gold deposit in the Dominican Republic. The project, 110 km north of Santo Domingo, contains an existing resource of 34.6 million oz. gold and 204 million oz. silver contained in 544 million tonnes of material grading 1.98 grams gold and 11.7 grams silver per tonne. Placer is considering treating the metallurgically complex sulphide ores using a combination of traditional technology and bioleaching.
“The project has the potential to be a large operation, though a deal [with the government] has yet to be approved,” says Taylor.
Meanwhile, in southeastern Venezuela, Placer has agreed to sell its 70% interest in the dormant Las Cristinas gold-copper project to Vancouver-based
“It was not our intention to develop the project at current metal prices,” says Taylor, who adds that the deal with Vannessa has the potential “to meet everyone’s objectives.”
During the quarter, Placer Dome produced 99.5 million lbs. copper at a total cost of US56 per lb., compared with year-ago output of 113.2 million lbs. at US62 per lb.
Under its gold forward sales program, the company realized an average price of US$316 per oz. in the first half of the year, compared with an average spot price of US$266 per oz.
Long-term debt at the end of the second quarter was US$887 million, whereas cash and short-term investments amounted to US$435 million.
South Deep
In South Africa, at the 50%-owned South Deep mine, Placer’s share of production during the first half of the year weighed in at 80,229 oz., or 12% more than a year earlier. The increase is attributed to higher grades and mill throughput. Cash and total production costs tallied to US$200 and US$233 per oz. respectively, in the recent half.
Placer anticipates that its share of production this year will increase by 16% as a result of higher throughput, itself a reflection of bulk mechanized mining and higher grades. At the end of the second quarter, the first two of seven trackless mining fleets were introduced into the mine.
“We are pleased at the progress we are making on the development and construction at South Deep,” says Taylor. “Considering the scale of the project and the challenges we have overcome, I can’t help but remain impressed by the potential of this asset.”
Workers are currently developing the South Deep Twin Shaft project. The ventilation shaft was sunk to a final depth of 2.7 km and the main shaft reached a depth of 2.9 km, with 108 metres to go to reach its final depth. According to the current mine plan, the main shaft will reach a hoisting capacity of 7,700 tonnes per day by the second half of 2003. Construction of the new mill began in the first quarter and is on schedule for commissioning by the first quarter of next year. Once this is completed, the mine is expected to crank out 700,000 oz. per year at a cash cost of US$160 per oz.
At the 60%-owned Granny Smith mine, in Australia, Placer Dome’s share of production tallied to 98,102 oz., during the first six months of the year. This represents a 31% decrease over the year-ago period and is partly a result of lower grades. Cash and total production costs increased to US$203 and US$215 per oz., respectively. Owing to lower head grades at the Sunrise pit, coupled with lower throughput, Placer expects that production at the Granny Smith mine will decrease by 13% this year. Production and cost figures are then expected to improve as the Wallaby deposit comes on-line.
“Prestripping of the pit has advanced, and construction of the mill is on schedule,” says Taylor. “We have commissioned our fleet of mining gear and expect to be producing from the Wallaby pit in the fourth quarter.”
Porgera mine
Placer’s share of production at its 50%-owned Porgera mine, in Papua New Guinea, during the first six months tallied to 197,649 oz. — higher than expected yet 5% lower than a year ago. A 12% decrease in grade was offset by improvements in mill throughput and recovery. Cash and total production costs tallied to US$177 and US$243 per oz., respectively, compared with US$149 and US$255 per oz. in the year-earlier period. The decline, which is attributed to higher operating costs and lower production, was offset by a lower depreciation resulting from the writedown Placer recorded last year.
Production at Porgera is expected to be 16% lower this year, owing to the gradual depletion of open-pit reserves. However, the mine is still expected to last another 10 years.
The Dome mine in northern Ontario produced 152,826 oz. in the first half of 2000 — 2% higher than a year earlier, thanks to an increase in grade. Cash and total production costs rang in at US$215 and US$276 per oz., respectively.
At the Campbell mine, in northwestern Ontario, production fell by 26% to 89,471 oz., with cash and total costs increasing to US$233 and US$212 per oz., respectively. Operations were hampered by the rock burst and seismic activity that occurred late in 2000. A 10-day mill shutdown contributed to the sagging performance, and this year, production at Campbell is expected to be reduced further by 24% to 175,000 oz.
Placer’s share of gold production at its 68%-owned Musselwhite mine, in northwestern Ontario, was 79,008 oz., or 7% lower than in the first half of last year. This fall is said to be a reflection of declining mill head grades. Cash and total costs increased to US$183 and US$252 per oz., respectively.
U.S. operations
At the 60%-owned Cortez mine in Nevada, Placer’s share of production from the Pipeline deposit was 358,390 oz., up 13% from last year’s figure. Cash costs increased by US$2 to US$55 per oz., and higher amortization costs drove up total costs to US$154 from US$115 per oz. Placer’s share of production at Cortez is expected to increase about 17% over last year, thanks in part to an increase in heap-leach production.
Meanwhile, higher grades and improved mill throughput boosted production at the Golden Sunlight mine, in southwestern Montana, by 9% to 118,015 oz. Cash and total costs during the first six months of 2001 fell to US$81 and US$210 per oz., respectively, compared with year-earlier figures of US$103 and US$241 per oz. However, the mine is approaching the end of its life, and gold production in 2001 is expected to be 18% lower than last year, owing to lower grades. Open-pit mining is scheduled to wind down at the end of July, to be followed by the milling of stockpiled ore.
At the Bald Mountain mine, in northeastern Nevada, production fell to 56,102 oz., a 9% decrease over the first six months of 2000. Cash and total costs were US$216 and US$349 per oz., respectively, compared with US$258 and US$342 per oz. a year ago.
At the Getchell mine, also in Nevada, Placer is busy delineating the N zone and carrying out a prefeasibility study. So far this year, the company has sunk US$24 million into exploration and development at Getchell. Additional property and exploration expenses are expected to amount to US$24 million
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Farther afield, mining wrapped up at the 80%-owned Misima mine in Papua New Guinea in late May, and the Kidston mine in Australia was depleted a month later. Production from Misima for the remainder of the year will be sourced from a low-grade stockpile, and stockpile milling should continue through to 2004. The mine cranked out 91,358 oz. gold at cash and total of US$192 and US$217 per oz., respectively, in the first six months of this year.
At the 70%-owned Kidston mine, Placer’s share of production during the first half of the year was 126,379 oz. at cash and total production costs of US$172 and US$230 per oz., respectively. The end of the Kidston legacy was marked by the pouring of its 3.5-millionth ounce in mid-July. Placer estimates the mine will squeeze out about 132,000 oz. by the end of the year.
At the Osborne mine, in northeastern Australia, copper production during the first six months totalled 50.9 million lbs., a 4% decrease over the corresponding period last year. Cash and total production costs, net of gold byproduct credits, were US54 and US64 per lb. of copper, respectively.
Placer’s share of production at its half-owned La Coipa mine in Chile was 28,597 oz. gold and 2.6 million oz. silver at cash and total costs of US$200 and US$288 per gold-equivalent ounce, respectively. This year, production at La Coipa will be sourced from three separate pits, as well as stockpiled ore. Because of the nature of the orebodies at La Coipa, Placer’s share of gold production there is expected to decline by 47% this year (compared with 2000), whereas silver production should increase by 10%.
At the Zaldivar mine, also in Chile, copper production during the first half of the year dropped by 9% to 148.4 million lb. at cash and total costs of US41 and US55 per lb., respectively.
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