Placer gets Amoco stake in Detour Lake gold mine

Placer Dome Inc. (TSE) has become a wealthier and slightly larger gold producer following the closing of a $5.5 billion acquisition of Placer Dome Petroleum by Amoco Canada Co.

When the largest merger in Canadian history closed Sept 1, it automatically eliminated Placer Dome’s $225 million guarantee of a Dome Petroleum bank loan.

Under an agreement signed last August, Amoco also transferred to Placer Dome its 50%-interest in the Detour Lake gold mine in return for the Placer Dome’s stake in debt- ridden Dome.

As sole owner of the Detour Lake project, Placer Dome can now credit to its own gold production quota all of the 115,000 oz the Timmins, Ont.-based operation is scheduled to produce this year.

Joint venture partners Campbell Red Lake Mines and Amoco brought the Detour Lake mine to production in 1983. But low grades and gold prices forced the companies to shut down open pit operations before it was revived as an underground mine late last year.

Just over a year after Placer Development, Dome Mines and Campbell Red Lake Mines merged to form Placer Dome Inc., the new entity is expecting to produce 885,000 oz gold from operations in five countries.

Other good news for Canada’s largest gold producer was that the release of the guarantee and the elimination of its shareholding in Dome Petroleum, which was previously written off, will result in a third quarter gain for Placer Dome.

The company recently reported a 62%-increase in first half income to $76.3 million from $47.1 million at the same time last year. Placer Dome’s net earnings in the first six months of 1988 were $77.1 million or 35 cents per share compared to $99.7 million or 46 cents per share in the first half of 1987.