Low price takes shine off Las Cristinas

The current slump in gold prices is causing Placer Dome (PDG-T) to consider suspending the US$575-million Las Cristinas project in Bolivar state, Venezuela.

Placer Dome has a 70% stake in the project, with the remainder held by the development company Corporacion Venezolana de Guyana (CVG).

Design work for the plant facilities resumed in April and production was scheduled to begin in 2001. Recently, however, capital investment on new equipment and design plans were halted.

Hugh Leggatt, investor relations officer for Placer Dome, likened the project to a thermostat — “not off, but turned down pretty low.”

A decision on whether to put the entire project on the back burner is expected within the next few weeks, he says, adding:

“Our partner, CVG, has to come to terms with the gold market conditions. They will perform their own investigations and make their own conclusions.”

Las Cristinas contains proven and probable reserves of 323 million tonnes grading 1.1 grams gold, equivalent to 11.7 million contained ounces of gold. Placer’s share is 8.2 million oz.

Production was expected to average 530,000 oz. annually over the first decade of a 20-year mine life, with cash costs pegged at US$155 per oz. and

total costs at US$240 per oz. However, with gold now trading at its lowest price in 20 years, the mine would barely be able to make a profit.

Placer is also considering shutting down the Getchell gold mine in Nevada. “The shutdown would allow the company to catch-up on development work

in order to make the mine more efficient,” Leggatt says.

In response to the weak gold price, Placer will trim its exploration budget to US$56 million in 1999, compared with US$89 million spent last year.

About US$20 million of that total will be applied to the Getchell property, with US$16 million earmarked for mine site exploration and US$20 million for general work.

In addition, the company plans to lay off 200 of its staff in order to reduce overhead costs to less than US$35 million from US$45 million.

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