Economics improved at Cristinas

Placer Dome (PDG-T) has reduced the anticipated average production costs at its 70%-owned Las Cristinas gold project in southeastern Venezuela.

The reduction of operating costs and the increase in production rates were achieved by revising mining schedules and increasing the anticipated mill throughput.

Average cash production costs over the first 10 years of the mine’s life are projected at US$155 per oz., whereas total costs are expected to be US$240 per oz. Average production over the 10-year period is pegged at 530,000 oz. per year.

Construction of support facilities for the mine began in August 1997, but project work was suspended in January 1998 pending the outcome of a lawsuit by Inversora Mael challenging government decisions pertaining to gold and copper mining rights. In June, the Suprement Court of Venezuela ruled in Placer’s favor.

The remaining 30% interest in Las Cristinas is held by state-owned Corporacion Venezolana de Guyana.

“Even in this low gold market, we have a growing cash flow as a result of lower operating costs, increased production and a very effective hedging program.” says John Willson, president of Placer Dome. “We expect continuing improvement in cash flow per share and earnings while maintaining the strongest exploration commitment in the gold industry.”

The major forecasts overall gold production of 2.8 million oz. for 1998 at an average cash cost of US$160 per oz. The previous forecast was 2.7 million oz. at US$170 per oz. Placer predicts that between 2000 and 2002, its average annual production will reach 2.5 million oz. at a cash production cost of about US$180 per oz.

Average cash costs for the third quarter of 1998 are expected to be less than US$140 per oz., which would be the seventh consecutive quarterly decline.

The reduction in costs is said to reflect an improvement in the performance of the Pipeline mine at the 60%-owned Cortez project in northeastern Nevada. The mine is reportedly on-track to produce 1 million oz. gold in 1998-99 at a cash cost of less than US$60 per oz.