Placer Dome sells Endako molybdenum mine

Placer Dome (PDG-T) is closing a chapter in its history by selling the last mine it operates in British Columbia — the Endako molybdenum operation.

The Vancouver-based company has signed a letter of intent with privately held Thompson Creek Mining of Denver, Colo., and Nissho Iwai of Japan. The sale is expected to be closed by late May, after which time terms and conditions will be revealed.

“It was a strategic decision,” says Placer Dome spokesman Hugh Leggatt.

“Endako has been a very good mine for us over the years, but it was acquired in the days when our focus was base metals — now it is on gold.” Situated near the town of Fraser Lake in central British Columbia, the mine began operations in 1965. Proven and probable reserves stand at 124.8 million tonnes grading 0.07% molybdenum, which, at current moly prices, are sufficient for a mine life of about 12 years.

Endako is one of the world’s largest primary producers of molybdenum, having cranked out 14.5 million lb. in 1996.

Thompson Creek will own 75% of the mine, with Nissho Iwai, as operator, owning the remainder. Thompson operates a moly mine in Idaho and a metallurgical plant in Pennsylvania. Nissho Iwai is a Japanese trading company active in the ferro-Alloy sector.

Both companies say preliminary plans include maintaining current employment and pay levels. They also expect Endako’s existing sales commitments to be honored.

The mine generated US$12 million in profits in 1996. In the previous year, a spike in moly prices resulted in earnings of US$67 million.

Legatt says Placer Dome had mixed feelings about selling the mine. “We’ve built a high reputation in B.C., and now we don’t have a mine here any more.

That’s what goes with becoming an international gold producer.” In related news, Placer reported first-quarter earnings of US$13 million (or 4 cents per share) on revenue of US$285 million, compared with US$8 million (3 cents per share) on US$263 million in the first three months of 1996. Cash flow rose to US$86 million from US$68 million.

Placer’s share of gold production was 535,000 oz., up from 458,000 oz. in the first quarter of 1996. The increase was due to the acquisition of greater equity in the Porgera mine in Papua New Guinea.

Copper mines contributed US$8 million to earnings, compared with US$6 million in the previous year’s first quarter. Sales of the red metal rose to 39 million lb. from 27 million lb. a year ago.

Molybdenum production contributed US$6 million to earnings, up from US$4 million in the comparable period of 1996.