1993’s 1.8-m-oz. target still in sight — Placer’s nine-month

Production results so far this year have Placer Dome (TSE) confident it can meet or exceed its production goal for 1993.

That goal is 1.8 million oz. gold at a cash cost of US$190 per oz. The company’s share of gold production for the first nine months of this year totaled 1.35 million oz., 8% lower than the same period in 1992. The decline was attributed to the reduced ownership of the Porgera mine and lower grades at the Misima mine, both of which are in Papua New Guinea. Another factor was the absence of production from the Big Bell, Marigold and Dona Lake mines, which have all been sold.

The drop in gold production also reflects a transitional period for the major, which has several projects at or near the feasibility stage. In the U.S., for example, the company is awaiting permits to develop a mine on the Pipeline gold property in Nevada.

Placer Dome owns 60% of the main Pipeline deposit. Proposed is an open-pit mine which would produce 3.7 million oz. gold over 12 years at a projected cash cost of US$111 per oz., including royalties. About 40% of this resource is subject to a lawsuit initiated against Placer Dome by Gold Fields Mining. An expedited mini-trial on a key issue of this legal dispute will begin in Reno on Nov. 15.

At the nearby South Pipeline gold deposit, drilling has increased the measured and indicated resource by 900,000 oz. to 3.2 million oz. gold. Delineation work is continuing.

Another significant project is the 70%-owned Las Cristinas, in Venezuela’s Kilometre 88 district. Placer Dome has reported a partial resource estimate of 5.2 million oz. gold on one area of mineralization. Recent metallurgical tests show good gold recoveries and the deposit is considered minable by open-pit methods. A decision to proceed to a full feasibility study is expected next year.

Meanwhile, closer to home in Ontario, summer drilling at the Musselwhite gold property has extended previously defined mineralization, and underground drilling is planned for 1994. “This project shows promise of being our next Canadian mine,” says company spokesman Hugh Leggatt.

The newly identified zones are expected to add to the previously reported (measured and indicated) resource estimate of 1.3 million oz. gold. An updated estimate is being prepared.

Placer Dome expects the Mulatos gold prospect in Mexico will also add to its reserve base. The 70%-held project (30% Kennecott) contains an aggregate resource of about 1.3 million oz. gold.

On the operations front, eight of the company’s 13 gold mines have reduced their cash production costs for the first nine months of the year, compared with those of 1992. The average cash production cost for the 9-month period was US$189 per oz., compared with US$192 per oz. in 1992.

But three factors — a decline in production, a lower average realized price for gold and copper, and reduced investment income — all contributed to a drop in earnings. Net earnings of US$45 million were reported for the period, compared with US$68 million a year ago.