MINER DETAILS — Leaving gold to the juniors

Frustrated with a lethargic gold price and the difficult task of maintaining reserves, some of Canada’s largest gold producers are turning to base metals for future growth.

Placer Dome has made no secret of diversifying into other minerals. One of its predecessor companies, Placer Development, long held to the view that it was simply in the business of mining. It didn’t matter what the mineral was — if it could be mined at a profit, Placer was interested.

The other predecessor companies, Dome Mines and Campbell Red Lake Mines, were pure gold companies. They enjoyed the high multiples that investors were willing to pay to own a gold stock, and they stayed with the business they knew best.

The continuing company, Placer Dome, also became known as a pure gold stock, one of the biggest in the business. But its current diversification is likely to gain momentum, despite the $270-million writedown it took this year on the Mt. Milligan copper-gold project.

Lac Minerals is another solid gold company — it trades at about 60-times earnings — that plans to shift more into base metals. A member of the million-ounce club of gold producers, Lac already produces significant amounts of copper as a byproduct. And it owns the Toqui zinc mine in Chile, a small but profitable base metal operation.

About a year ago, Lac hired a new vice-president of business development, and picked up some base metal analysts on a contract basis to look into opportunities outside of gold. Lac’s established presence in Chile at Toqui and the El Indio mine gives it a head start in the world’s leading copper producing country.

Cambior Inc. has always been considered a pure gold company, the godfather of Quebec’s gold mining industry. But a year ago it bought Westmont Mining to get its hands on the Carlota copper deposit in Arizona. The acquisition indicates Cambior’s readiness to step out of its pure-gold personality and diversify into base metals.

The big gold producers are obviously finding it tough to maintain their track record of growth and earnings when they are stuck with a single product. As they move into other minerals, it could open opportunities for the small and medium gold producers to become recognized as the true pure gold plays.