Prices, investment gains aid Placer Dome profit

Higher gold prices and recent gains from investments boosted Placer Dome’s earnings for the first nine months of 1987 to $184.6 million or 35 cents per share, on revenues of $603.1 million. This is up from $130.1 million or 64 cents per share on revenues of $549.3 million in 1986.

Despite over-all lower gold production, operating earnings rose to $144.3 million from $108.8 million over the same period in 1986. Gold prices averaging $426(US) and generally higher metal prices accounted for the earnings gain.

Gold output by the Placer Dome group amounted to 694,000 oz compared to 740,000 oz in 1986 (573,000 oz and 628,000 oz respectively after excluding minority interests). Lower production is attributed to the Detour Lake mine in northeastern Ontario being in transition while changing from open pit to underground production. While the changeover is taking place, millfeed is coming from low grade stockpiles and underground development ore. Ore production is also coming from a lower grade zone at the Kidston mine in Queensland, Australia.

Other income amounted to $121.3 million before related income taxes of $12.7 million. Included in this was a $55.9-million gain from the July issue in Australia of 22 million Placer Pacific shares (now 75.8% owned) at $3.30(A) each; $40 million from the sale of shares in Equity Silver and $25.4 million from other investment gains.

Placer Dome’s investment income improved to $26.5 million from $12.3 million while interest expense declined to $14.1 million from $22.8 million. In addition to $272.4 million cash flow from operations ($149.4 million in 1986) cash from share and warrant issues amounted to $171.1 million ($188.2 million). Exploration spending at $29.1 million continues at about the same level as last year.

In Papua New Guinea, negotiations with the Bank of Papua New Guinea for financing development of the Misima gold mine have been concluded and final government approval is pending. At the big Porgera gold deposit (25% owned), an extensive diamond drilling program has increased Zone VII ore reserves to 5.7 million tons averaging 0.744 oz gold per ton (N.M., Nov 9/87).

In Canada, the Dona Lake gold property in northwestern Ontario is expected to go into production in the first quarter of 1989 at a rate of 40,000 oz per year. Clearing, shaft collar construction and foundation installations are under way.

The company reports that following the August, 1987, merger between Placer Development, Dome Mines and Campbell Red Lake Mines, integration of functions and personnel is largely complete.