Placer makes commitment to become juniors’ partner of choice’

These new mines are in such diverse locations as Papua New Guinea (Misima and Porgera), Australia (Big Bell and Granny Smith), Chile (two stages of La Coipa) and Canada (Dona Lake).

All this gives a good idea of the company’s ability to apply its technical expertise and financial resources to mine-making in the complex international arena. That’s seen as the strength of Anthony Petrina, who rose through the ranks on the operations side to become president and chief executive officer just over a year ago.

But Placer Dome’s agenda for growth encompasses more than this impressive tier of new mines that are expected to boost gold production to over one million ounces this year. With large cash reserves, the international mining company also has a well-defined strategy for growth through acquisition and exploration.

A major acquisition undoubtedly represents a faster and more dramatic route to achieve growth, but Placer Dome isn’t giving exploration short shrift while it scrutinizes such opportunities. The company’s exploration budget, mostly directed to gold, will reach $50 million this year (excluding mine-site exploration), an increase of about $6 million from the 1988 budget.

A commitment to exploration isn’t new for Placer Dome, but what is new (at least in this decade) is a strategy aimed at becoming the “partner of choice” for junior mining companies with quality properties.

That initiative is managed by Lawrie Reinertson, Placer Dome’s affable senior vice-president of exploration, who was mindful of the important role juniors made in Placer’s early growth. Reinertson also heads up the company’s global exploration effort involving 21 exploration offices and over 100 active mineral properties.

The company’s effort to build a stronger relationship with the junior mining community was timely. Reinertson’s proposal was approved by the board in late 1988, about the time the financing crunch really began hitting most juniors.

“I proposed we establish a budget to make small investments in the order of $200,000-500,000 by way of private placements in junior companies that had good properties and/or people capable of generating good projects,” said Reinertson.

While filling a financing void for juniors, the “opportunity fund” also increased Placer Dome’s exposure to quality exploration projects with minimal downside risk. “The current value of the portfolio is very close to the original investment,” Reinertson said in a recent interview.

Reinertson said another appeal to the junior is that Placer Dome doesn’t immediately insist on taking over management of the project, although that’s usually the longer- term objective.

By the end of September Placer Dome had invested in 11 companies, and several other deals are pending. No specific commodities were targeted. However, the program does have a North American focus as most juniors have projects close to home.

These days Placer Dome is keeping a keen eye on the Grevet Twp. property held by VSM Exploration (ME) and Serem Quebec. VSM is owned 50.1% by Placer Dome.

Reinertson said encouraging drill results have been coming from the zinc-rich base metal project near Quevillon in northwestern Quebec. The property is considered to be well located in that rail, power and a road pass near or through the property.

“It’s at the point where economic evaluation is warranted and yet we’re just now encountering the best thicknesses and grades,” he said.

A recent drill hole, No 70, intersected a 25.3-ft (true width) averaging 0.92% copper, 10.05% zinc, and 1.5 oz silver per ton and hole 72 intersected a 24.4-ft true width grading 0.23% copper, 7.26% zinc and 0.540 oz silver.

According to VSM Exploration, the latest drill results “substantially increased the tonnage potential of the deposit” as several zones appear to be coming together at depth to form a single wider lens. Reserves were previously estimated by VSM at 2.2 million tons grading 8.79% zinc, 0.45% copper, 0.21% lead and 1.3 oz silver in two of four known horizons.

Placer Dome also invested in an interesting gold project near Beardmore, Ont., despite a long-standing legal dispute for control of the property between Metalore Resources (TSE) and Ontex Resources (ASE). Placer Dome invested in Metalore, and also has an option to earn a 50% interest in the Brookbank property by spending $7 million.

“It’s an exciting project with something in the order of one million tons of 0.30 oz gold undeveloped in an attractive geological setting,” said Reinertson. “We took a risk on the lawsuit, but we would have spent that money on riskier projects with far less chance of success than Metalore.”

A “foot-in-the-door” private placement was made earlier this year in Equinox Resources (TSE) that will provide funds for metallurgical testwork at the J&L property near Revelstoke, B.C. Equinox has a number of other projects, including a 23.56% interest in the producing Buckhorn gold mine in Nevada.

At J&L, Equinox reports a mineable reserve of 585,640 tons grading 0.23 oz gold, 1.8 oz silver, 4.9% zinc and 2.3% lead within a portion of a larger polymetallic deposit. The mineralization is refractory and contains an average of 5% arsenic, so Equinox will be using the funds from the private placement for pilot scale metallurgical testwork.

An investment was made in International Curator Resources (VSE), but Placer Dome also secured options to earn interests in two of the junior’s projects near Juneau, Alaska.

The major can earn 60% of the Dream property, a polymetallic massive sulphide within the same rock package as other deposits in the region (BP Minerals’ Greens Creek deposit and Geddes’ Windy Craggy deposit). And it can earn a 50% interest in the Jualin gold project by spending $7 million over three years.

Last summer Placer Dome bought into Golden Crescent Resources (ASE). However, this deal is a little out of the ordinary in that it allows Golden Cr escent to participate in about 26 Placer Dome exploration projects in Ontario by providing $7 million for exploration over three years. But Placer Dome has a right to back into Golden Crescent’s properties in the Swastika/Kirkland Lake area where two former gold producers are located.

Placer Dome recently increased to 12.6% its interest in Cazador Explorations (VSE), which has been exploring the Hanson Lake polymetallic prospect in central British Columbia (originally discovered by Placer). Current work on the property consists of trenching and sampling so it’s still an early stage project.

“Geologically it can’t be ignored,” said Reinertson. “The property has a very strong bull’s- eye’ geochemical anomaly on a regional basis, and these usually indicate a strong mineralized system.”

An investment in Alban Explorations (VSE) is considered by Placer Dome as providing good exposure to Nevada mineral projects and to the capabilities of that company’s management team.

The Mexican Hat gold property in Arizona caught the eye of Placer Dome which made an investment in the property’s owner, Oneida Resources (VSE). Placer Dome is the operator of a drill program to evaluate the property’s bulk tonnage potential. According to Oneida, six major gold-bearing zones have been identified to date.

An investment in Gerle Gold (VSE) reflects Placer Dome’s interest in that company’s McConnell Creek gold property north of Smithers, B.C., where it can also earn up to a 60% interest.

This 7,500-acre property is reported to contain over eight miles of favorable geology hosting chlorite-sericite-carbonate shear zones with quartz veins, lenses and stringer. Gerle Gold said this environment is “similar to the Con mine at Yellowknife” and has the potential for great lateral and vertical extent.

Placer Dome has about a 25% equity interest in Eastfield Resources (VSE)
which has a number of interesting projects in the Fort St. James, B.C., area. Exploration at Eastfield’s Indata property is focused on a quartz-sulphide gold- silver vein system and more recently on the property’s potential to host a porphyry copper-gold system. The Swan property, an Eastfield/Northair Mines joint venture, is viewed as having potential for a “Mt. Milligan-type” porphyry copper-gold deposit.

“Having Placer Dome involved in our company is a tremendous asset,” said Eastfield President G. L. Garratt. “We’re not a promotional group and this association gives us more scope to do serious work.”

An investment in Dufresnoy Exploration and Mining (ME) provides Placer Dome with exposure to diversified properties in Quebec. And the major has a deal pending that would enable it to acquire a minimum 50.1% interest in Skukum Gold (VSE) which has a large land position in the Wheaton River district in the Yukon. The Goddell Gulch property is considered to be among the more interesting properties in that company’s portfolio.

Outside the fund, Placer Dome has a number of joint venture projects with juniors along with its own extensive exploration portfolio. Recently the company acquired Sulphurets Gold (VSE), which owns a large porphyry copper-gold deposit near Stewart, B.C.

Placer Dome increased to 28.5%, its long-standing interest in QPX Minerals (VSE) which has a number of projects in British Columbia, including the advanced QR gold deposit near Fort St. James.

Outside of North America the company is working on the Omai Concession gold property in Guyana optioned from Golden Star Resources (TSE), and it is active on a variety of projects in Chile, Mexico, Australia, Fiji, Papua New Guinea, Indonesia, Malaysia, Tanzania. But no matter where in the world, precious metals remains Placer Dome’s main exploration focus. But in ke eping with the company’s philosophy to consider any commodity that can be mined at a profit, Reinertson said the company is also interested in copper, zinc and nickel.

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