Sale of Investments Boosts Placer Dome Earnings

Anthony J. Petrina, president, said the sale of investments, higher investment income and improved base metal earnings boosted consolidated net earnings to $262.4 million ($1.16 per share) for the year, up significantly from $158.2 million (73 cents per share) in 1987.

Major contributors to the increased earnings were third quarter gains of $123.8 million from the sale of investments in Falconbridge Ltd. and McIntyre Mines and $25.1 million related to the divestiture of an interest in Dome Petroleum. The sale of Falconbridge and McIntyre generated proceeds of $532.7 million which Petrina said “are available to add value to the corporation by acquisition or the development of mineral properties into successful mines.”

Investment income of $72.4 million rose from $40.1 million due mainly to interest received on the company’s substantial cash balance.

Earnings from gold mining operations was $98.3 million in 1988. The company said the higher price received through a forward-selling program for a portion of production was more than offset by an 8% decline in the value of the U.S. dollar, and by higher production costs. The average price realized over the year was $454(US) per oz.

Petrina said he expected lower average cash costs in 1989 as a result of production from new mines. The Big Bell mine in Western Australia and the Dona Lake mine in Ontario poured their first gold bar in February, 1989, while the Misima mine in Papua New Guinea is scheduled to begin operating in April this year. With the start of these three new mines, the company is predicting its 1989 share of production could reach 1.2 million oz.

Placer Dome also recently acquired a 50% interest in the large La Coipa gold/silver deposit in Chile for $75.0 million. Production at 1,100 tons per day is expected to begin by mid-1989 from the higher grade portion of the orebody.

The company is now updating a feasibility study for a larger plant which could begin operations in early 1991, to produce about 235,000 oz gold and 20.0 million oz silver annually for the first two years.

A feasibility study is under way on the Granny Smith gold property in Western Australia and the company is awaiting approval of the Porgera project by the government of Papua New Guinea before making a decision on development with its partners.

Earnings from investments in base metal mines increased in 1988, contributing $26.4 million more to net earnings than in 1987. Oil and gas earnings decreased due to a $20 million write-down of property values and lower oil prices and production volumes.

Earnings by the Endako mine improved on volume of molybdenum sold, while the Gibraltar copper mine benefited from improved copper prices. Although both B.C. operations operated at less than capacity in 1988, the company said the mines were important contributors to net earnings after the Campbell, Kidston and Golden Sunlight mines.

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