Hedging boosts Placer Dome’s results

Helped by a hedging program that generated a US$50-premium for every ounce of gold produced at its international stable of mines, Placer Dome (PDG-T) posted a US$49-million profit for the first six months of this year. This compares with a loss of US$42 million during the first half of 2000, when 1.5 million oz. were produced.

Cash costs held at US$156 per oz. in the recent first half, about the same as in the year-earlier period, while total costs rang in at US$231. Copper production in the first half of 2000 was 200 million lbs. at a cash cost of US44 per lb. and a total cost of US55. The bulk of this came from the Zaldivar mine in Chile.

On the operations front, Placer is completing a new shaft at its 50%-owned South Deep mine in South Africa. First-half production there was up 12% over the previous year to 80,000 oz. (Placer’s share) at a cash cost of US$200 per oz. and a total cost of US$233. Once the new South Deep shaft is completed, a conversion to mechanized mining is expected to result in an increase in annualized production to 700,000 oz. gold in the second half of 2003.

Placer’s Canadian mines produced 321,305 oz. in the first half of 2001, 10% less than a year earlier. Some of the reduction was attributed to last year’s rock burst and seismic activity at the Campbell mine in Ontario, which caused the re-sequencing of planned mining areas. Campbell’s production in the first half fell 26% to 89,471 oz. from 120,756 oz. a year earlier. Cash and total costs increased to US$233 per oz. and US$312 per oz., respectively, from US$170 and US$229 a year earlier.

Two of Placer’s international operations reached the end of their lives in the latest quarter. The Kidston mine in Australia, which recently poured its 3.5-millionth oz., is moving into its final reclamation stages. The Misima mine in Papua New Guinea also reached the end of its productive days, though milling of stockpiled ore will continue into 2004.