Placer plans for base metals

Since taking over the helm of Placer Dome (TSE) in 1988, Anthony (Tony) Petrina has overseen a flurry of mine-making that has enabled the international company to reach a gold production target of 1.4 million oz. in 1990. But now, pegged as a blue chip gold producer by mining analysts, Placer Dome is shifting its emphasis to be more aggressive in base metal. “I’ve always said that I don’t care what we mine as long as we can make money doing it,” Petrina told The Northern Miner in a recent interview. “And I’ve never viewed the company as exclusively a gold company. Someday analysts will notice that we already mine other things.”

Since Petrina took over the company has brought six new gold mines on stream. In 1989 there were Dona Lake in Ontario, Misima in Papua New Guinea, Big Bell in Australia and the first stage of La Coipa in Chile. These were followed in 1990 by Granny Smith in Australia and the first phase of the huge Porgera project in Papua New Guinea.

Maintaining gold output and looking increasingly at base metals aren’t anything new for Petrina, a no-nonsense mining engineer who worked his way up the corporate ladder from Placer’s Craigmont open pit/underground copper mine near Merritt, B.C.

Petrina admits, though, that Placer Dome won’t emerge as a sizable base metal producer overnight, particlarly as the company is determined to maintain its hard-won position as one of the world’s largest gold producers.

But the company is already directing some of its exploration activities to base metals. A field exploration program was recently completed at the Mt. Milligan project which Petrina expects could become a major copper producer by mid-1993.

“The proof of that pudding will be when we present our stage one report to the provincial government next month,” he said. “We haven’t found any technical problems, and we have not identified any environmental problems of consequence.”

It will be on the basis of this report that the company expects to receive approval-in-principal for mine construction. This could occur this summer, to be followed by a feasibility study later in the year to determine whether the economics of the project justify proceeding to production.

Placer acquired the advanced porphyry gold-copper project for a total acquisition cost of about $255 million last year. At the time, it was estimated to have potential to produce 85 million lb. copper and 350,000 oz. gold per year.

Elsewhere, Placer Dome intends to make full use of its more than 60 years of international mining experience as it places increased emphasis on acquiring, exploring and developing low-cost reserves of minerals other than gold.

As an example, Petrina said the company would be expanding its search for copper in Chile, where it is already involved in gold mining.

“We’ll go anywhere in the world, unless there is good reason not to,” he said.

For those who discount mineral assets outside North America, Petrina notes a growing number of jurisdictions in Canada and in the U.S. which “prefer not to have mines,” and which make their regulations reflect that preference.

Closer to home, work is expected to continue this year on the Kerr copper-gold deposit near Stewart, B.C., acquired by Placer Dome as an early-stage prospect several years ago.

Kerr is not too far from Eskay Creek, a high-grade gold-base metal project at the feasibility stage. Placer Dome paid about $105 million to acquire about 45% of Stikine Resources, which in turn has 50% of the deposit. But rival Corona emerged with a greater interest in the project, which it now operates.

The two majors recently broke off talks aimed at determining what role and/or possibly what interest each company would have in the project as it moves toward production. Petrina won’t comment on why the talks broke down, except to say it wasn’t over the issue of operatorship.

“We just decided we weren’t getting anywhere and figured we would go about our business,” he said.

Petrina said Eskay Creek has environmental issues that have to be dealt with, particularly from a metallurgical standpoint, which have been factored into the company’s capital cost estimates. But he sees the project as feasible and a good investment. He admits, however, he would be happier with it “if we had more to do with it.”

Petrina also laid to rest the “rumor that won’t die,” which has Placer Dome looking to take over Corona Corp.

“You can’t take over Corona because of the voting shares,” he said. “It’s the ultimate poison pill.”

Mt. Milligan and Eskay Creek are still some years from production, but Placer Dome is continuing work this year aimed at expanding production at the Porgera and La Coipa gold mines. Despite some tough technical challenges, all the company’s new mines are reported to be doing well, with the exception of Big Bell where grades were lower than expected and the ore harder than expected.

The downside of all this mine-making is that increased production means increased depletion of the company’s gold reserve base. That hasn’t gone unnoticed by mining analysts, who are already comparing Placer Dome to an aggressive up-and-comer, American Barrick Resources, which turned in a stellar performance on that and other fronts in 1990.