Getchell pushes placer into red

Vancouver — Placer Dome (PDG-T) posted a US$29 million profit during the fourth quarter, but US$301 million in writedowns pushed the miner US$133 million into the red for the year.

The company reported net earnings US$29 million, or US9 per share, on sales revenue of US$292 million during the fourth quarter last year. This compares with a loss of US$89 million, or US27 per share, on revenue of US$337 million, during the year earlier period. The difference is due to lower gold production and a lower realized gold price.

Placer cranked out 657,000 oz. gold and 111 million lb. of copper during the quarter. This compares with 760,000 oz. gold and 109 million lb. of copper in the year earlier period. The corporation’s forward sales program realized a premium of US$63 per oz. for an average price of US$342 per oz. verses the forth quarter average spot price of US$279 per oz. As of December 31, Placer’s mark-to-market value of its precious metals sales was US$490 million. This was based on a spot price of US$277 per oz. gold.

“We were successful on a number of fronts, such as the development of new deposits at existing mines, however, the year’s performance was overshadowed by the decision we made to write off the carrying value of the Getchell mine,” said Jay Taylor, Placers President and CEO. “Our prudent, realistic management of this asset clears the way for a stronger financial performance in 2002. Our reduction in the gold price assumption used to calculate reserves shows just how robust this company is. Despite a drop from a US$300 per oz. assumption to US$275 per oz. our reserve base dropped by only 5% to 44.5 million quality ounces. We remain committed to generating value from every ounce,” commented Taylor.

Cash flow from operations tallied US$47 million during the quarter, up from US$29 million in the fourth quarter last year. The increase is attributed to investment in non-cash working capital as well as increased exploration, property holding, resource development and restructuring spending in the fourth quarter. Mine operating earnings during the quarter were US$79 million compared with US$91 million last year.

For the year, Placer tabled net earnings before unusual items of US$133 million on revenues of US$1.2 billion, compared with a loss of US$92 million on revenues of US$1.4 billion. When accounting for the write-down of the Getchell mine during the third quarter, the company posted a loss of US$133 million, or 41 per share. Cash flow for operations was pegged at US$364 million The company cranked out 2.75 million ounces of gold last year at cash and total costs of US$160 per oz and US$233 per oz., respectively.

Placer forward sales program for the year realized a US$55 per oz. premium over the average spot price of US$271 per oz. At the end of 2001 the major had committed a total of 7.92 million ounces under its gold sales program at an average price US$400 per oz over a 13-year period. This represents about 18% of its reserves. The mark to market value was pegged at US$490 million. Based on interest and lease rates as of February 13, 2002, the mark-to-market value of Placer’s gold sales program breaks even at a gold price of US$345 per oz.

At the 60%-owned Cortez mine in Nevada, the company’s share of production during 2001 was 18% higher than in 2000. This was attributed to the fact that heap leach production from the South Pipeline coming on stream during the second quarter and there was a higher contribution from the sale of carbonaceous ore. In October last year, The Cortez joint venture agreed to sell 270,000 tonnes of carbonaceous ore grading about 8 grams gold per tonne to Barrick’s Goldstrike mine. Barrick has the option to purchase an additional 180,000 tonnes of ore.

At the Getchel mine, the ore stockpiles will be processed by Newmont’s nearby Twin Creeks property. Placer has put Getchel on care and maintenance with a remaining crew of 37 employees.

At the Golden Sunlight mine in Montana, Placer secured a stable power contract, which will allow the mine to mill its stockpiled ore through to mid 2002. After that the pit ramp will be mined and processed until the end of the mine’s life, now scheduled for 2003.

Placer states that production from the Wallaby deposit at its 60% owned Granny Smith mine in Australia was brought on-line during the fourth quarter. The deposit remains open at depth and work will focus on further delineating its potential.

At the 50% owned Porgera mine in Papua New Guinea, the company reports that stage three mining was competed and a smooth transition to stage four mining was achieved. Open pit production is expected to average about 675,000 oz per year over the next four years. The company started development of the underground mine on a limited scale and Placer expects it to add 68,000 oz gold per year to the operation.

At the 50% owned South Deep mine in South Africa, development of the main shaft was slowed during the year due to poor ground conditions. The shaft is still scheduled to be commissioned for the last half of 2003. Construction of the new mill is nearly completed and should be commissioned in the second quarter this year. Placer is in the process of developing a new life of mine plan and results are expected by mid-year.

Placer declared a semi-annual dividend of US5 per share which is payable on March 18, 2002 to shareholders of record at the close of business on March 1. The company expects to product in excess of 2.5 million oz. of gold and 420 million pounds of copper this year.