$43-per-oz. improvement for Dome

The manager of Placer Dome’s (TSE) Dome mine in Timmins says the company hopes to reduce its average production costs by as much as US$43 per oz. Robert Perry made the comment at the conclusion of a 6-month labor dispute with the United Steelworkers of America union, local 7580 (T.N.M. June 18/90).

The union voted 75% in favor of the company’s “final and decisive” contract offer, tabled Oct. 11. The ratification coincided with Placer Dome’s threat to close the historic 80-year-old gold mine by Nov. 16 if the offer wasn’t signed.

The Dome is one of Canada’s oldest gold producers. But, it is also one of the country’s most expensive gold mines to operate. A survey by The Northern Miner (June 11/90) showed the Dome’s average 1989 production costs were US$342 an oz., the highest in the survey.

In the first quarter of 1990, the only full production quarter Dome had this year, the company reported an operating loss of $4.3 million.

Under the company’s renewal plan, the Dome is hoping to reduce production costs to as low as US$300 an oz. One way Placer Dome is trying to accomplish that is by replacing senior workers with what the company feels are younger, better-trained and less expensive personnel.

The 6-month dispute cost many casualties. Heading into the negotiations in early January, Placer Dome made it clear that there would be job losses if the price of gold didn’t come down.

On Oct. 11, five and a half months into the strike, the company dropped the bombshell — 354 employees, close to half the workforce, were going to be laid off. Under the old collective agreement, the company utilized a clause that allowed it to lay off employees theyfelt didn’t fit into their future plans.

As a result, a great number of senior workers were given layoff notices, some with 25 years of experience and more. Other, less experienced workers, some with less than 10 years on the job, were taken back.

“We had to,” said mine manager Bob Perry. “If we were going to survive, we needed to run this operation with our best people.”

According to Perry, about half of the mine’s 6.8 million proven and probable reserves are in labor- intensive, narrow stopes. Perry says the Dome is going to concentrate on the rest of its operation while it looks for modern, innovative, and inexpensive ways to process the narrow stope reserves.

Perry says Placer Dome and partner American Reserve Mining (TSE) are at least a year away from a production decision at the Paymaster project, which is adjacent to the main Dome property.

The two companies have been dewatering the old Paymaster mine for three years. That work is almost complete. Now that the 6-month strike at the Dome is over, Placer Dome and American Reserve hope to accelerate an underground exploration program to determine the depth and scope of the old Paymaster orebody.

On the same day that the Steelworkers announced they had ratified the new 3-year contract with the Dome, the two companies announced that a regular 3-shift, 7-day-a-week operation would resume at the Paymaster.

The prospect of the Dome closing down if the union didn’t accept the Oct. 11 offer was convincing enough for 168 union members to sign a petition demanding that the union executive call a special membership meeting so a vote could be discussed.

The company has told the union that it hopes to begin recalling laid- off miners about 6-16 weeks after production has resumed. At presstime, many of the members who were laid off were still deciding whether to accept early retirement, take their severance package or take the chance that they would be one of those recalled.

“I guess it’s an experience the company is going to have to live with,” said staff representative Gerry Loranger. “Trying to run that mine with only 300 workers won’t be easy. I’m certain they’re going to need a lot more of our members than that. My only hope is that they can call them back as early as possible.”

The whole Dome scenario is a far cry from the mid-1980s when company officials were boasting that the 75-year-old mine had another 75 years ahead of it. That air of confidence was a major factor in Dome’s decision to spend $93 million on its No. 8 shaft and $17 million on a new mill.

“The grade of our ore has been around 0.10 oz. a ton,” explains Perry. “Some of our original projections for better grades didn’t turn out. So that’s why we’re cutting costs.”