Placer’s earnings fall despite lower production costs

Despite a 29% increase in gold production and the lowest cash production costs since 1987, Placer Dome’s (TSE) net earnings fell to US$11 million for the first three months of this year from US$15 million in the year-earlier period.

The company attributed the lower earnings to an 8% decline in the average realized gold prices, and a US$6-million increase in after-tax exploration expense.

The company’s share of production from its 16 mines totalled 460,000 oz. at an average cash cost of US$202 per oz. in the 1992 first quarter, with 12 of these mines achieving a lower unit cash cost of production than in the comparable 1991 period.

The company said the improvement is the result of the application of “intensive measures to increase efficiencies.”

This initiative included a work restructuring at the Campbell and Sigma mines in Canada, where the combined workforce was reduced by 179 through layoffs and early retirements.

Placer Dome expects to maintain existing production at these operations with fewer employees, and similar measures to reduce costs are being considered for other higher-cost operations.

The major spent US$14 million on exploration during the first three months of this year, which includes infill exploration drilling at the exciting Pipeline gold deposit discovery in Nevada. A revised preliminary reserve estimate for this 60% owned project is now in progress.

About US$6 million was spent to explore the Leonor copper property in northern Chile, and Placer Pacific (75.7% owned) is managing exploration of two gold prospects in Papua New Guinea; the Mount Kare alluvial deposit and the Hidden Valley deposit. Placer Dome already operates the Porgera and Misima gold mines in Papua New Guinea.