FOR THE RECORD — Placer Dome committed to Latin American

Five years ago, Placer Dome (TSE) had no investments in South America. Today, it is managing a successful gold and silver mine in Chile. In addition, the company is constructing Latin America’s largest greenfield solvent extraction-electrowinning plant (also in Chile) and recently began a feasibility study on a promising gold property in Venezuela.

Although Placer Dome has maintained an exploration office in Santiago for nearly two decades, its involvement in Latin America really took root in 1989 with the acquisition of a half interest in La Coipa.

Last year, La Coipa was the largest gold producer in South America, producing 258,000 oz. It also maintained its position as the largest silver mine in the world, cranking out 13 million oz. The immediate and dramatic success of La Coipa induced Placer Dome to increase its exploration and acquisition efforts in Chile. In late 1992, its efforts were rewarded when it acquired half of another substantial property in Chile — the Zaldivar copper deposit. Zaldivar contains more than 240 million tonnes of mixed (oxide-sulphide) ore averaging greater than 1% copper. Placer updated the feasibility study immediately after construction of the $600-million project began in October, 1993. Cathode production is projected for the third quarter of 1995, with cash costs expected to be in the lower one-third of world production. The success of Placer Dome and other early mining companies in Chile has led to a stampede not unlike that of the Klondike gold rush.

Placer Dome now views several other nations in Latin America as holding the same potential that Chile held five years ago. As a result, the company has redirected its exploration and acquisition activities. This shift can be seen in Venezuela (with the project known as Las Cristinas), in Argentina (where three properties are being explored) and in Peru (where a promising gold property has been optioned from Mineroperu).

The company’s most promising property is Las Cristinas, a large, open-pit-type gold deposit in Bolivar state. Placer Dome has a 70% interest, with CVG, a Venezuelan state entity, holding the remaining 30%. Placer Dome first optioned Las Cristinas in 1991 and, by late-1993, a geologic resource containing more than 7.7 million oz. gold had been outlined. In February of this year, a feasibility study was begun, which may lead to a production decision in 1995. A country manager was appointed late last year and Placer Dome will open a management office in Caracas next month.

With Zaldivar now under way and the prospect of Las Cristinas rising, Placer Dome has turned its attention to organizing its growth in Latin America. The company learned from its Mexican and Australasian operations in the 1980s that, in order to succeed in a region, it is essential to recognize, respect and be responsive to local customs and traditions. It was therefore decided that a new, decentralized business unit — Placer Dome Latin America (PDLA) — would be created to oversee activities in the region.

Santiago, Chile, was selected as the regional headquarters for PDLA as it places management close to the company’s Chilean assets; the base is also convenient in that it is close to both Peru and Argentina. Chile also has an efficient communication and transportation network, a long mining history and a tremendous pool of mining talent.

As Placer’s origins are Canadian, the traditional structure of its organization has been management from Canada. Yet as it expands internationally, the company is organizing semi-autonomous, regional entities to oversee activities in various parts of the world.

One of the key challenges in developing such entities is ensuring that they are both financially efficient and operationally flexible. In Latin America, this process has taken considerable thought. The company has consolidated the ownership of all Latin American properties to allow for the fluid movement of funds between mature operations (such as La Coipa) and developing projects (such as Las Cristinas) in the region. It has also maintained offshore ownership of assets, enabling it to benefit from foreign-investor status in certain nations.

In addition, regional exploration efforts have been organized under a separate group of companies to allow for the deduction of these expenses against earnings elsewhere in the Placer Dome group. Similarly, the regional headquarters, as well as national offices (such as the one in Caracas), are subsidiaries, allowing these expenses to be credited against income in other regions.

Placer Dome has established very clear goals over the past year. These are: * to increase annual gold production by 35% to about 2.5 million oz. by the year 2000;

* to maintain at least 10 years of reserves to sustain this production rate; * to maintain the cash cost of producing gold in the lower tercile; and * to ensure that non-gold revenues not exceed 25% of revenues and that they be derived from high-quality copper and copper-gold operations, such as Zaldivar, which have costs in the lower half of the industry cash cost curve. — Jay Taylor is president of Placer Dome Latin America. The article was taken from a speech he delivered at this year’s “Investing in the Americas” conference, held in Miami, Fla.