Flexibility key to Placer Dome exploration strategy

In terms of gold production, Placer Dome (TSE) surpassed the 1-millionth-oz. level for the first time ever in 1989. While that’s good news for shareholders, it also means the company has to replace that production by adding new reserves through exploration or acquisition in order to avoid slipping down the rungs of the production ladder in the future. Eliseo Gonzalez-Urien, Placer Dome’s new vice-president of exploration, didn’t argue this will be a daunting task though he may have preferred it described as a challenge.

“It does become much harder to keep up the pace of finding enough ounces to maintain reserves as you get bigger, never mind increase them,” he recently told The Northern Miner. “This year we expect to produce about 1.4 million oz. and that means in order to maintain our reserves we have to find 1.4 million oz. in 1990.”

Educated in Chile and the U.S., European-born Gonzalez-Urien is responsible for the overall direction of Placer Dome’s exploration activities worldwide, with the exception of those of Australia-based Placer Pacific. He was formerly vice-president of exploration for Placer Dome U.S., based in San Francisco.

If there is a hallmark to Gonzalez- Urien’s approach to exploration, it is, by his own admission, an emphasis on being flexible and ready for new opportunities.

In his new capacity, he says this will involve a quarterly review of priorities worldwide to determine “what’s looking good, what’s not looking good, and what new opportunities are waiting to be funded.”

Gonzalez-Urien says he has learned “from bitter experience” that becoming property-bound is one of the worst traps to fall into in exploration.

“You end up not dropping anything because of the fear of missing a discovery,” he says, adding that property commitments can quickly eat up an exploration budget, leaving the company less able to participate if a new and better opportunity arises.

“Flexibility and the ability to redirect your resources to better opportunities are essential,” he emphasizes. “We have to be able to make those hard choices.”

Although gold will continue to be the main commodity of interest with respect to Placer Dome’s 1990 exploration strategy, Gonzalez- Urien says the company has decided to increase its exposure to other metals.

“We will continue to be primarily a gold company but we will be looking at metals other than gold at a higher level than we have in the past,” he says, adding that no specific commodities have been prioritized.

“Obviously, we all have our lists, but what we are interested in is to find deposits that put us in the lower 30% of cost production that are big enough to carry us through metal cycles.” With those two restrictions, I guess we would look at anything.”

Placer Dome is proposing to spend about $58 million on exploration in 1990, the bulk of this in North America. Last year the company spent $88 million, a higher amount than normal, largely because the $12.1-million acquisition of the Kerr copper-gold deposit in northwestern British Columbia was treated as an exploration expense.

Eastern Canada will have the largest slice of the exploration budget pie, according to Gonzalez- Urien, with Western Canada and the U.S. also viewed as key areas.

Outside of North America, Chile will continue to be an important exploration focus. It’s a country Gonzalez-Urien knows well. Geologically endowed, it has a stable economy, a positive mining culture and an experienced workforce.

Like other companies that have been attracted to Chile, Placer Dome will be focusing its exploration emphasis on bulk-tonnage gold-rich porphyry deposits. It already has a 50% interest in the producing La Coipa gold mine where an expansion program is under way.

Gonzalez-Urien says the company, as many other major companies do these day, plans to look a little harder in South America, and do a little research into opportunities in Eastern Europe.