LATIN AMERICA SPECIAL — Placer Dome eyes acquisitions

By the end of this decade, Placer Dome (TSE) expects to be producing gold at a rate of 2.5 million oz. per year, and possibly more, assuming the right acquisitions come along.

Company President John Willson says the increase to 2.5-million oz. from the 1994 level of 1.7 million oz. will come not only from projects already in the pipeline, such as Las Cristinas in Venezuela, but also from continuing exploration at existing mine sites.

“Plateauing is not desirable for a gold company,” Willson said in a recent press conference in Toronto. “We want to have quality growth, and expect to have considerable gains with new projects in 1997 and 1998.” Willson also indicated that the company is considering acquiring advanced-stage exploration projects on which some drilling has been done, but which the current owner is either misjudging or having trouble raising funds to continue work.

“We have a talented mergers-and-acquisitions group that is actively chasing a lot of opportunities,” Willson said.

Placer Dome had been eying Lac Minerals, and in particular its properties in Chile’s El Indio belt, before Royal Oak Mines launched its unsuccessful take-over bid for Lac last summer.

Willson said Placer Dome did not get into the bidding fray, first because it did not want “to go hostile” and second because it did not believe the numbers (of reserves and resources) that Lac “pulled out of its hat” just before it was acquired by Barrick Gold (TSE).

Instead, the company stepped up the pace of exploration at mine sites and at advanced properties around the world. As Willson explained, this focus was the result of a corporate decision to “decentralize” the company into four operating units: Placer Dome Canada, Placer Dome U.S., Placer Dome Latin America and Placer Pacific. All are wholly owned, with the exception of Placer Pacific, which is a 75.4%-owned public company.

Willson believes this restructuring allows the company to retain the advantages associated with being a large corporation, while, at the same time, providing each local unit with an entrepreneurial edge. “This strategy is based on the fundamental cents principle] that if you give people more responsibility and more autonomy, you get more motivated and more productive people,” he said.

And the proof of the pudding, Willson believes, is in the eating. “I think cents the strategy] is working beautifully,” he said. “In Canada, for example, all our operations have a new lease on life.”

With the pit being expanded at the Dome gold mine in Ontario, Placer Dome expects its share of gold output to increase by 10%, to 1.9 million oz., in 1995.

The largest measured and indicated resource expansion at the company’s mines last year was 500,000 oz. at the Campbell operation in northwestern Ontario. As well, exploration added more than a million ounces to bring to 2.2 million oz. the company’s share at the Musselwhite gold property, also in Ontario. A feasibility study for Musselwhite is due by the end of 1995. Even the company’s 58-year-old Sigma mine in Val d’Or, Que., has received a new lease on life. Placer Dome has bought subsurface rights to a portion of the adjacent Lamaque gold mine, where exploration drilling is under way. Meanwhile, the major continues to make discoveries within the mineral properties hosting several of its mines. “The best case at the moment is Kidston,” Willson said. Five rigs are at work on this Australian property, testing the newly discovered Eldridge deposit.

At the end of 1994, Placer Dome reported total gold reserves of 19.8 million oz., which does not include resources identified on exploration projects. “Looking ahead, with the completion of feasibility studies on Las Cristinas and the South Pipeline project in Nevada, as much as 5 million oz. could be added to our current reserves this year,” Willson projected. The company is said to be making progress in its discussions with the Venezuelan government aimed at resolving outstanding business issues related to the Las Cristinas project.