Tailings spill hampers bottom line of Placer

A tailings spill at the Marcopper copper mine in the Philippines continued to haunt Placer Dome (PDG-T) in 1996, contributing to a loss of US$65 million (or 27 cents per share).

By comparison, the company earned US$74 million (or 31 cents per share) in 1995.

The spill occurred in March when a concrete plug gave way, allowing 4 million tonnes of mine waste to be dumped into a nearby river. Placer assumed total responsibility for the failure, though it owns only a 40% interest in the mine.

Several other factors detracted from Placer’s bottom line for the year, including: the decision to sell its Sigma and Kiena gold mines in northwestern Quebec; layoffs at the Detour Lake gold mine in northwestern Ontario (part of a plan to reduce production costs); and the suspension of development work at the former-producing Paymaster gold property near Timmins, Ont.

Earnings from mine operations totalled US$255 million for the year (down US$53 million from 1995), and the company spent US$98 million on exploration (down US$12 million).

Total reserves rose to 26.5 million oz. from 21 million oz., largely as a result of development work at Placer’s 70%-owned Las Cristinas gold project in Venezuela. Reserves also increased at the Granny Smith and Bald Mountain gold mines in Australia and Nevada, respectively.

Sales revenue in 1996 was US$1.2 billion, up from US$1 billion reported for the previous year. The average realized price of gold was US$406 per oz., compared with US$392 in 1995.

Gold production amounted to 2.2 million oz., of which Placer’s share was 1.9 million oz. at an average cash cost of US$235 per oz. The company expects its 1997 share to be 2.3 million oz. at a cash cost of about US$240 per oz.

Production benefitted from the first full year of increased output at the Dome mine in Timmins, Ont., following a major expansion there in 1995.

The company also benefitted from higher grades and a full 12 months of production at the Golden Sunlight mine in Montana, higher grades at the Granny Smith mine in Australia, and a 45% increase in production at the Cortez joint venture in Nevada (the result of higher grades and improved recoveries).

Those gains were offset by production problems at the Sigma and Detour Lake mines in Canada, reduced production due to harder ore and lower grades at the Misima mine in Papua New Guinea, and lower grades at the Kidston mine in Australia.

Earnings from copper were US$36 million, up from US$9 million in 1995. The increase was due to the first full year of operations at the 50%-owned Zaldivar mine in Chile and the Osborne mine in Australia.