Placer Dome winds up year with 68% increase in profits

Winding up a profitable year, Placer Dome had 68% higher earnings in 1987, as well as three new gold mines coming into production.

Net profits rose to $158.2 million or 73 cents per share, up from $93.9 million or 46 cents in 1986.

Operating earnings were $223.9 million, up 70% from $131.6 million the year before. The company’s nine gold mines provided 81% of operating earnings and another three mines will be on- stream in 1989 — the Misima, Big Bell and Dona Lake mines.

Other mining units in the group were also more profitable, contributing to total sales of $833.9 million compared to $719 million in 1986.

Earnings benefited from sales of subsidiaries’ shares. Gains of $55.9 million were recorded from Placer Pacific’s issue in Australia of 22 million treasury shares at $3.80(A) each; $40 million from sale of shares in Equity Silver at $12.50 each and $22 million from other investment transactions.

Fourth quarter earnings were reduced by unusual losses, resulting in a net loss of $26.4 million compared to a loss of $36.2 million the year before.

An agreement was made to sell interests in a number of oil and gas assets in western Canada. The agreed price of $45 million for these minor interests in many properties reduced 1987 net earnings by $56 million. The sale, scheduled to close March 31, is currently affected by a dispute between the original purchaser and a party claiming right of first refusal with respect to the assets. In addition, a writedown in book value of the leach plant and scavenger circuit at the 59%-owned Equity Silver mine created a net loss of $11.1 million. Production higher

Mines in the Placer Dome group produced a total 952,000 oz of gold in 1987, of which Placer Dome’s share was 781,000 oz. This is slightly down from 1986 because of reduced ownership in the Kidston mine and transition from open pit to underground mining at Detour Lake. Average cost per ounce of gold produced in 1987 was $195(US).

Higher earnings were reported by Gibraltar copper mine, Falconbridge Ltd., the Endako molybdenum mine and Real de Angeles silver mine. Improved mercury markets allowed the McDermitt mine to schedule its reopening for March, 1988.

When the new mines come on stream in 1989, Placer Dome’s share of gold production is expected to increase to over one million oz per year.

The company’s 61%-owned Misima gold mine in Australia will add 245,000 oz of gold and 1.6 million oz of silver to Placer Dome’s share of production in the first 12 months of operations at a cost of around $100(US) per oz. The company’s share of gold from the 38%-owned Big Bell property in Australia and the 100%-owned Dona Lake property in Ontario will be more than 100,000 oz of gold.

Also in the wings is the large, 23%-owned Porgera gold property in Papua New Guinea, where a feasibility study is nearing completion. The Seabee and Musselwhite gold projects in Canada are at advanced stages of evaluation.