Gold producer Homestake Mining (NYSE) exceeded the million- ounce mark in 1989 for the first time in its 114-year history. The company was also able to lower its cash production costs but it also reported a decrease in net income. San Francisco-based Homestake reported net income of US$53.3 million (55 cents per share) on revenue of US$452.8 million, compared with US$66.4 million (68 cents per share) on revenue of US$427.5 million in 1988.
A lower world gold price affected earnings last year. On the positive side, net income was buoyed by Homestake’s share of earnings from lead-zinc-copper producer The Doe Run Co. and gains from discontinued oil and gas operations.
Homestake’s gold production in 1989 totalled 1,014,702 oz., up by 30% from 1988. (Homestake joins Newmont Gold and Placer Dome as North America’s first million- ounce gold producers.) Cash production costs in 1989 averaged US$264 per oz., down $11 from the previous year. The company attributes the higher production to gains at most of its existing mines, production from three new mines and expanded Australian operations.
The company’s 80% owned Australian subsidiary, Homestake Gold of Australia, last year acquired a 50% interest in a portion of the western Australia gold-mining district of Kalgoorlie. The Australian subsidiary is expected to become a significant contributor to Homestake’s annual output.
The long-producing Homestake mine in South Dakota continued to be the company’s largest single contributor, producing 381,788 oz. gold in 1989. Cash production costs at the mine averaged US$301 per oz., up slightly from 1988. Homestake Mining (NYSE) $000s except per-share items* Year ended Dec. 31 1989 1988 Revenue $452,774 $427,493 Net earnings (loss) 53,324 66,401
per share 0.55 0.68 *US dollars004
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