Lacklustre first half for Placer

Significantly higher exploration expenditures, along with lower gold-related income and an investment writeoff, were experienced by Placer Dome (TSE) in the first half of 1995.

The company netted US$12 million on revenue of US$471 million (or US5 cents per share), compared with US$61 million on US$458 million (or US25 cents per share) in the first half of 1994.

Gold production amounted to 828,000 oz., a 7% reduction from the year-ago period, while cash production costs rose to US$224 from US$194 per oz.

Total exploration and feasibility expenditures increased to US$78 million from US$40 million.

About $35 million was spent exploring the Vasilkovskoye property in Kazakhstan. Placer Dome has an indirect 27.5% interest in the project, which hosts a geological resource of 138 million tonnes grading 3.03 grams gold per tonne at a 1.5-gram cutoff.

Here at home, the company met with delays in its attempt to expand the Dome mine in Timmins. These delays, combined with lower-than-expected head grades at the Detour Lake mine in northeastern Ontario, retarded gold production while escalating cash costs.

The news wasn’t much better at some of Placer Dome’s other operations.

Production at the Golden Sunlight mine near Butte, Mont., was lower than expected, as a result of delays in restarting operations and low head grades and recoveries. Lower grades were also encountered at the Porgera mine in Papua New Guinea and at the Campbell mine in Balmertown, Ont., contributing further to a decline in revenue from gold sales.

On a happier note, Placer benefited from a substantial rise in the dealer oxide price of molybdenum, which averaged US$11.44 per lb. for the period. As a result, operating earnings amounted to US$58 million, compared with only US$4 million in the first half of 1994.

The price of moly has since dropped, and is currently in the range of US$4.74 to US$5.30 per lb.

Consistent with its renewed focus on gold production, Placer Dome decided to write off its US$25.9-million investment in Tempo Technology, thereby reducing net earnings by US$17 million.

Production for the year is expected to total 1.8 million oz. at an average cash cost of US$210 per oz. from mines in Canada, the U.S., Australia, Papua New Guinea, Chile and the Philippines.