Amalgamation spurs Placer growth

Three new mines now under development will increase Placer Dome’s (TSE) gold production 40% to more than one million oz a year, President John Walton notes in the annual report.

Much has been achieved in the short time since amalgamation of Placer Development, Dome Mines and Campbell Red Lake Mines in August, 1987, Walton says. Earnings in the first year shot up 68% to $158.2 million, compared to $93.9 million in 1986 (N.M., March 14/88).

Construction started in January on the Misima gold project in Papua New Guinea, owned 80% by Australian subsidiary Placer Pacific. The mine is scheduled to come on-stream in July, 1989, adding 245,000 oz of gold and 1.6 million oz of silver as the company’s 60.6% share of production. Production costs for the first year will be $100(US) per oz. Reserves are 62 million tons grading 0.403 oz gold per ton and 0.612 oz silver. Placer Dome’s share of production from the 37%-owned Big Bell property and the 100%-owned Dona Lake property should total more than 100,000 oz of gold, commencing in 1989.

Costing $133.4 million, the Big Bell mine near Cue in western Australia, will come on-stream in the first quarter of 1989. The mine will produce 160,000 oz of gold over the first six years and 120,000 oz over the next seven years of underground mining. An additional $64.4 million will be required later for underground development. Proven reserves are 20.5 million tons grading 0.097 oz gold, with a probable 1.5 million tons averaging 0.070 oz.

Dona Lake, an underground mine near Pickle Lake, Ont., will start up in the second quarter of 1989, producing 40,000 oz per year. Construction of the 550-ton-per- day concentrator will start in April, at a cost of $42.6 million. Proven and probable reserves are 754,000 tons averaging 0.24 oz gold per ton. Exploration increases

Exploration expenditures in 1988 are budgeted at $52 million, up from $40.8 million in 1987, Walton says.

The main exploration thrust is the large Porgera gold property in Papua New Guinea in which Placer Dome has a 25.3% interest through Placer Pacific. An exploration adit to delineate the high grade section of zone 7 was completed in mid- 1987 and reserves in this section were 5.5 million tons grading 0.774 oz gold and 0.645 oz silver. The rest of the deposit is estimated at 86.6 million tons grading 0.102 oz gold and 0.289 oz silver. A feasibility study is nearing completion.

Also in the spotlight is the Seabee property in the La Ronge area of northern Saskatchewan where a decline and underground drill program were completed in 1987. Feasibility work is now under way. Placer Dome can earn a 55% interest in the property when the feasibility is completed mid-1988.

Placer Dome is operator of the 35%-owned Musselwhite project north of Pickle Lake, Ont. A $13.8- million underground exploration program including shaft sinking, underground drilling and bulk sampling, will be followed by a feasibility study this summer. Reserves are six million tons grading 0.2 oz gold. Nine gold mines

With 13 mines, nine of which are gold mines, Placer Dome is one of the world’s largest gold producers. Group mines produced a total of 952,000 oz of gold in 1987, of which Placer Dome’s share was 781,000 oz. Average production cost was $197(US) per oz.

Largest producers were the Campbell mine in Red Lake, Ont. which produced 235,423 oz at a cost of $132 per oz and the Kidston mine in Queensland, Australia (owned 53.1%), which produced 228,194 oz at a cost of $186 per oz. The Dome mine near Timmins, Ont., contributed 132,017 oz at $322 per oz.

The transition from open pit to underground mining at the 50%- owned Detour Lake mine accounted for a drop in production to 53,648 oz costing $378 an oz. Under an agreement with Amoco Canada Petroleum, if that company successfully completes its acquisition of Dome Petroleum, Amoco Canada will obtain the unconditional release of Placer Dome’s $225-million guarantee of a Dome Petroleum bank loan and will transfer its 50% interest in the Detour Lake mine to Placer Dome. In return, Placer Dome will deliver the Amoco Canada securities received for its Dome Petroleum shares, the cost of which has already been written off, give up certain security and guarantee fee rights and pay Amoco Canada $15 million.