Gold giant Placer Dome reports solid profit

Hard on the heels of the formation of Placer Dome Inc., now North America’s largest gold producer, the company has come up with some good financial numbers.

Placer Dome was created just days ago by the merger of Placer Develo pment, Dome Mines and Campbell Red Lake Mines. It says in the first six months this year higher gold and silver prices increased the new company’s operating earnings to $98.7 million which, along with other income, produced consolidated net earnings of $99.7 million, or 46 cents a share.

Operating earnings in the comparative period, it says, were $70.3 million to produce, with other income, consolidated net earnings of $102 million or 51 cents a share.

Revenues in the two periods were $401.6 million, and $359 million, respectively.

In the latest 6-month period, the average gold price realized was $419(US) per oz, compared to $353 in 1986. Total gold production in this year’s period was 499,000 oz, or 397,000 oz after exclusion of minority interests.

Other income in 1987 of $65.8 million, before income taxes, includes $40 million from sale of shares in Equity Silver Mines, and $25.8 million from marketable securities, the sale of McIntyre Mines’ coal operations, and transactions by Falconbridge Ltd. (in which Placer Dome holds a 25% interest, on a fully-diluted basis).

Other income in 1986 of $77.8 million primarily represented gain on the sale of a 21.4% interest in Placer Pacific, Placer Dome says.

In Canada, the report notes, the Dona Lake gold property in northwestern Ontario (N.M., June 29/87) is expected to go into production in the first quarter of 1989 at a rate of 40,000 oz per year.

In Papua New Guinea, Placer Dome continues, negotiations for a mining development agreement at the Misima gold project have been concluded, and final approval by the government and financing approval by the Bank of Papua New Guinea must be obtained before construction can begin.

It says mine production in the start-up period and the first 12 months of commercial operations is expected to be over 400,000 oz gold and 2.6 million oz silver.

Placer Pacific (75.8% owned by Placer Dome) sold 22 million of its shares in Australia to finance the initial portion of the estimated $266 million cost of bringing Misima into production, and Placer Dome says this sale will result in a third- quarter gain to the corporation of about $55 million.

Also in Papua New Guinea, discussions have begun with the government on development of the 25.3%-owned Porgera gold property, and a draft feasibility study is to be presented in February next year.

On the basis of currently-known reserves, Porgera’s annual gold production is expected to be over 800,000 oz over the first five years, and 640,000 oz over the first 10 years.