NEW FRONTIERS IN MINING — Placer Dome output hits 1.8m oz.

Among gold mining companies, Placer Dome (TSE) is the largest of the Canadian-based producers. Its global output in 1993 was about 1.8 million oz., a total it is expected to match or better for many more years.

Brokerage house Marathon Securities reports that discoveries at Pipeline in Nevada and at Las Cristinas in Venezuela’s Kilometre 88 area give Placer “the reserves it needs to maintain production at 2 million oz. per year or more for the long term.”

Projected output for 1994 is 1.9 million oz.

According to Marathon, Placer’s more profitable mines in 1993 were Porgera and Misima in Papua New Guinea and Campbell in northwestern Ontario, where cash operating costs for each averaged well below US$200 per oz. “Placer’s accelerated exploration efforts have paid off very well over the last two years,” writes Marathon.

Proven and probable reserves of 2.6 million oz. have been outlined at Pipeline, where a production decision could come at any time. At 70%-owned Las Cristinas, where a preliminary reserve estimate of more than 5 million oz. has been outlined, a feasibility study is set to be started this year. The company will continue to explore other targets in the same area.

At the Dome mine in Timmins, Ont., the company expects to decide this month on whether to proceed with a major expansion. A feasibility study nearing completion indicates that open-pit development would augment underground mining to increase gold production to 315,000 oz. per year from the 170,000 oz. projected for 1994. It is anticipated this level of output would last for 11 years at an average cost production cost of US$215 per oz. Results from drill work at the 68%-owned Musselwhite gold project in northwestern Ontario have been incorporated into a revised resource estimate which is expected to expand the current reserves of 4.6 million tons grading 0.28 oz. gold per ton. This compilation work is expected to be completed in February. Placer and its Musselwhite partner, TVX Gold (TSE), have budgeted $12 million for exploration and development work this year.

In Chile, where Placer is a joint partner with TVX at the Coipa gold-copper mine, Placer has a 50% stake in the Zaldivar solvent

extraction-electrowinning project. A feasibility study has been completed and Marathon says production may be under way in 1995. Projected total annual production at Zaldivar is 225 million lb. copper at an average cash cost of US52 cents per lb.

Marathon says the company has no financial problems. To Sept. 30, 1993, working capital exceeded US$700 million and long-term debt stood at US$250 million. Cash is being generated at an annual rate of more than US$250 million per year.

“Placer’s main problem in the short-term is that reported earnings will remain low,” Marathon says. “The company reported only 19 cents per share for the first nine months of 1993.

“Increased focus on the company’s core businesses and capitalization of costs at some of the more advanced projects should improve earnings from 1994 onwards.”

Marathon recommends Placer as a core position in all gold portfolios. The company remains a favorable trading vehicle, it says, because of its market liquidity and volatility.

At the beginning of January, Placer created a subsidiary, Placer Dome Canada.