International program set by Placer Dome

Earnings from its cornerstone gold mining operations were hurt last year by higher production costs and a weaker U.S. dollar.

Although improved base metal earnings and the sale of investments in Falconbridge Ltd. and McIntyre Mines boosted consolidated net earnings to a healthy $262.4 million in 1988, earnings from gold mining operations declined to $98.3 million, some $24.3 million lower than in 1987.

In the company’s latest annual report, President Anthony Petrina said the company is anticipating a lower average cash production cost this year as a result of production from four new gold mines.

These operations are projected to boost total gold production to 1.4 million oz in 1989, of which 1.2 million oz would be to Placer Dome’s account. The average cash cost per ounce from its share of production is expected to be reduced to $228(US) this year from the $242 cost per ounce achieved in 1988.

Three of the new mines –Dona Lake in Ontario, Big Bell in Australia and Misima in Papua New Guinea — are already in production. A fourth, La Coipa in Chile, is slated to begin production later this year.

The 100%-owned Dona Lake underground mine was completed on budget at $43 million and ahead of schedule. Current proven and probable reserves are 754,000 tons at an average grade of 0.24 oz gold. Gold production at the 550-ton-per-day operation is expected to average 40,000 oz each year over the projected mine life.

The Big Bell open pit mine in Australia is budgeted to produce 160,000 oz gold each year, of which 61,000 oz is Placer Dome’s share. The mine has reserves of 21.9 million tons at an average grade of 0.095 oz. (Placer Dome recently announced a production decision for its joint ventured Granny Smith open pit mine project in Australia which has mineable reserves reported at 23 million tons grading 0.05 oz.)

The Misima mine in Papua New Guinea, in which Placer Dome has a 60.6% interest, is targeted to produce 400,000 oz of gold and 2.6 million oz of silver from a 16,500- ton-per-day mining and milling operation. Proven and probable reserves, including dilution, are calculated at 62 million tons at an average grade of 0.0403 oz gold and 0.612 oz silver.

Production at La Coipa will begin from a 1,100-ton-per-day plant later this year while a feasibility study for a larger mining operation and plant (estimated at 16,500 tons per day) is updated.

While gold is the principal source of earnings for Placer Dome, earnings from its copper and molybdenum mines in British Columbia together contributed $17.1 million, or 15% to earnings before other income in 1988.

Viewing exploration as its momentum for growth, Placer Dome spent $55.9 million on finding new prospects last year. The company also invested $1 million in five junior mining companies; Alban Explorations (VSE), Eastfield Resources (VSE), Cazador Explorations (VSE), Silvera Resources (ASE) and Baie Roberts which is active in Newfoundland.

The company continued this trend into 1989 by acquiring positions in Gerle Gold (VSE), and more recently, Oneida Resources (VSE).

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