Investors bail after Placer’s weak fourth quarter

Vancouver – Shares in gold-mining heavyweight, Placer Dome (PDG-T), were off sharply on the Toronto Stock Exchange, as the company’s fourth quarter earnings slumped on lower production and higher costs. The shares fell by $1.64 to close at $21.86, a 7% drop.

The company, earned US$39 million or 9 per share, on revenue of US$460 million for the quarter, compared with a profit of US$81 million or 20 a share on sales of US$492 million a year earlier.

Placer reported earnings of US$284 million for 2004, (68 a share) on revenues of $1.89 billion, which represents a 24% rise over 2003 earnings of US$229 million (56 a share) on revenues of 1.76 billion.

The weak fourth quarter had a dampening effect on the year’s results over which the company produced less ounces of gold and less pounds of copper at higher costs.

Placer produced 3.65 million oz. gold at cash costs of US$240 an oz. versus 3.86 million produced at cash costs of US$218 an oz., last year.

The company realized a gold price of US$391 an oz. for the year, which is US$18 below the average gold spot price.Placer Dome reduced its hedge by 1.5 million oz. which leaves 9 million oz. sold forward, which it aims to trim back to 7.5 million oz. this year.

Placer’s copper production was down as well at higher costs.

In 2004, Placer produced 423 million lbs. copper at costs of 55 a lb. compared with 425 million lbs. at 52 in 2003.

Placer Dome aims to increase gold production to 3.7 million ounces at total costs of US$315 to US$325 per oz. (Total costs for gold production are US$298 this year).

The company expects to make decisions on three development stage projects – Cortez Hills in Nevada, Pueblo Viejo in the Dominican Republic and Cerro Casale in Chile.

And, Placer will dust off Mount Milligan, in northern British Columbia and hopes that prefeasibility work will determine whether it should be advanced to feasibility.

The company has budgeted US$90 million for exploration this year, the bulk of which will be spent in the vicinity of the company’s operating mines.