Placer Dome will need new mines to maintain existing production

At the company’s annual meeting, Anthony Petrina, president and chief executive officer, laid to rest any concerns about the company’s ability to do this, noting that four new mines were recently brought into production within a six month period.

Petrina also pointed out that Placer Dome is committed to develop the Granny Smith gold mine in Western Australia and it recently obtained approval from the government of Papua New Guinea to begin construction at its 30%-owned Porgera gold project, a $900-million investment for the joint venture partners.

Despite a lower gold price, Petrina emphasized that Placer Dome’s average cost is well below the current level, but he conceded, “this year’s operating earnings will likely be below those of 1988.” (First-quarter net earnings in 1989 were $37.8 million on a consolidated basis, about $2 million lower than last year). Placer sells gold forward and he said existing contracts extend beyond 1989 at a “realized price which should be better than the London spot price.”

Responding to a question on forward sales, Petrina said they were under “continuous review” and he noted sales were done on a mine- by-mine basis and for new projects. Discussing base metal operations, he emphasized that “copper and molybdenum mines are benefitting from strong metal prices a nd will make a significant contribution to 1989 earnings. Their performance underscores the value of the diversified product mix that Placer Dome enjoys even while it continues as one of the world’s most important gold producers.”

A United Church of Canada representative queried the company on the tailings disposal system at Marcopper in the Philippines and Placer Dome responded that a deep ocean discharge system would be operational by month end. The company has a 40% interest in the project but is not operator. Unless a new copper deposit is developed, Marcopper has a very limited life and the company said it would use whatever influence it had to ensure employees were treated fairly and retrained for new jobs.

Placer Dome also noted it has adopted a multi-tiered approach to ensure its mines operate within strict environmental standards. Environmental audi ting is planned for all operations at various times and results will be reviewed by management. Also, an environmental operating plan and an accident contingency plan have been or are being prepared for all operating mines.

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