EXPLORATION ’95 — Placer Dome works to rebuild reserves

Replacing reserves is no easy task for companies that annually produce millions of ounces of gold. One major company that has encountered considerable success in achieving this goal through exploration at mine sites, as well as at less advanced properties, is Placer Dome (TSE).

With a growing roster of projects in a variety of countries, Placer Dome plans to spend US$89 million on exploration this year, a sizable increase from the 1994 budget of US$66 million.

Last year’s exploration effort enabled the company to replace mined reserves and add additional resources not yet classified as ore. The Vancouver-based major reported consolidated gold production of 2 million oz. in 1994, of which its share was 1.7 million oz. at an average cash production cost of US$198 per oz.

At year-end, Placer Dome’s share of proven and probable ore reserves stood at 19.8 million oz. gold, up slightly from the 19 million oz. reported for year-end 1993. But that is only part of the story.

The major reported that its estimated share of measured and indicated mineral resources contained an additional 7.9 million oz. at mines, and 18.7 million oz. at exploration properties. It was noted, however, that considerable technical work and financial assessment would be required to convert these resources into the ore reserve category; hence the decision to increase the exploration budget.

The most significant resource additions were achieved at Musselwhite in Ontario, at Mulatos in Mexico and at Las Cristinas in Venezuela, all of which are described as advanced exploration properties.

The feasibility study on development of the 70% owned Las Cristinas project is due for completion in April. Assuming a positive result, a mine development decision will be considered after various business issues have been resolved with the Venezuelan government. At last report, Las Cristinas hosted 236 million tons grading 0.036 oz. gold per ton, the majority of which is minable by open-pit methods.

A feasibility study on the Musselwhite property is to be completed by year-end, and a prefeasibility study on the Mulatos is continuing. Mulatos is a joint venture with Kennecott, and it contains 54 million tons grading 0.047 oz.

Placer’s Canadian division has been particularly successful in increasing reserves and expanding the overall potential of its operations. The Dome mine expansion is progressing on schedule for new production to come on-stream in the second quarter at an annual rate of 315,000 oz. This combined open-pit and underground operation — the mine began operating in 1910 — is in Timmins, Ont.

At the end of 1994, Dome’s proven and probable reserves stood at 36.6 million tons of 0.088 oz. (3.2 million contained ounces), plus an additional resource of 2.4 million tons at 0.13 oz. (312,000 contained ounces).

Plans have also been approved to increase production at the Detour Lake and Sigma mines.

At Detour Lake, in northeastern Ontario, the mine and mill are to be expanded to 4,130 from 3,140 tons per day at a cost of US$15 million. Once this is accomplished, sometime in 1996, gold production is expected to increase to more than 200,000 from 124,549 oz. per year.

At year-end, Detour Lake had proven and probable reserves of 5.6 million tons at 0.149 oz. (844,000 contained ounces), as well as a further resource of 430,000 tons at 0.198 oz. (85,000 contained ounces).

At Sigma, situated at Val d’Or, the mill will be modified to increase capacity to 2,065 tons per day from 1,760 tons at a cost of US$13 million. With completion scheduled for mid-1996, gold production is expected to increase to about 100,000 from 85,145 oz. per year.

Proven and probable reserves at Sigma were 4.4 million tons of 0.11 oz. at year-end (499,000 contained ounces), plus an additional resource of 690,000 tons at 0.16 oz. (112,000 contained ounces).

Sigma and Detour Lake are both viewed as having considerable potential to identify additional reserves.

In Nevada, Placer Dome U.S. is overseeing a feasibility study for the South Pipeline gold deposit held by the 60% owned Cortez joint venture. This study should be completed by mid-1995. A legal dispute with respect to the Pipeline deposit is now scheduled to come to trial on March 21.

On the financial front, Placer Dome reported consolidated net earnings of US$105 million for 1994, or US44 cents per share, compared with net earnings of US$107 million in 1993.