Placer sets record earnings in first Quarter

Vancouver Increased production and a higher realized gold price drove Placer Dome (PDG-T) to record earnings of US$64 million, or 16 per share during the first quarter.

The corporation tabled net earnings of US$64 million, or US$0.16 per share, on sales of US$409 million during the first quarter of 2003. This compares with US$37 million, or US$0.11 per share, on sales of US$303 million, during the first quarter last year.

Placer states that its net earnings also benefited from unrealized non-hedge derivatives gains of US$35 million after tax. This was offset by an after-tax charge to earnings of US$17 million due to the change in accounting policy for asset retirement obligations.

Cash flow from operations tallied to US$85 million, or US$0.21 per share. This is down 11% over the comparable quarter last year due to higher cash operating costs, deferred stripping expenditures and increased exploration spending.

“By any number of measures we have a successful start to the year," commented Jay Taylor, President and CEO of Placer Dome. "We significantly reduced debt and interest expenses; we had the highest net earnings of any quarter in our history; we significantly advanced two major development properties; we are developing the Turquoise Ridge mine, which will add 300,000 ounces per year of production late next year; and now, we have a new discovery at the Cortez joint venture. The future is looking very bright.”

Total production tallied to 903,000 ounces of gold with cash and total costs of US$205 per oz. and US$260 per oz., respectively. This compares with 666,000 oz. gold at cash and production costs of US$165 per oz. and US$222 per oz., respectively.

The increase in gold production is attributed to the acquisition of the AurionGold properties as well as the increased production from the Golden Sunlight, Cortez and Porgera mines. Placer states that cash costs increased due to the appreciation of the South African Rand, Canadian and Australian dollars against the U.S. dollar, as well as higher energy costs globally. Costs overall also increased due to the higher-cost production from several assets acquired from AurionGold.

Mine operating earnings totaled US$93 million, which is down 5% over the corresponding period in 2002. This is attributed to higher production costs.

Production at the Golden Sunlight mine in Nevada was up 182% over the prior-year period. This is attributed to the fact that last year’s mine feed was supplemented by lower grade stockpiles. The operation is expected to reach the end of its mine life by the end of the fourth quarter.

The Cortez joint venture in Nevada upped production 14% over the same period last year. This is due to higher grade. Placer Dome has discovered a new mineralized zone at Cortez Hills, 12 km southeast of the Pipeline/South Pipeline deposit and 0.8 km north of the Pediment deposit. Placer estimates that the deposit hosts a measured and indicated resource of 2.1 million oz. plus an additional inferred mineral resource of 900,000 ounces. Four drills are currently delineating mineralization on the property and exploration is continuing.

At the Porgera mine in Papua New Guinea, Placer Dome’s share of production during the first quarter was up 69% over the corresponding period in 2002. This is attributed to increased ownership after the AurionGold acquisition, higher grade as well as higher recovery.

Placer Dome realized an average spot price of US$358 per oz.., a US$6 per oz. premium over the average spot price of gold for the quarter. The company also reduced its committed ounces in its gold sales and derivative program by 1.1 million ounces to 11.5 million ounces, or 22% of gold reserves as of 2002 year-end. The company plans to reduce its committed ounces to below 10 million by the end of this year. As of March 31, 2003 the mark-to-market value of the program was a positive US$113 million at the quarter’s closing gold price of US$$336 per oz.

Also during the first quarter, Placer Dome repaid US$137 million of AurionGold’s debt and completed a $200 million, 30-year non-convertible debenture private placement. The company also will repay US$200 million of bonds due in May this year using existing cash balances. Placer states that this debt reduction strategy will save about US$18 million in net interest expense per year starting in 2004 and will reduce long-term debt by more than US$300 million.

As of March 31, 2003, Placer Dome had cash and short-term investments valued at US$651 million. Placer expects to produce 3.5 million ounces of gold and 400 million pounds of copper in 2003, at cash and total costs of US$205 per oz and US$265 per oz. respectively.