Low bullion prices have induced Placer Dome (PDG-T) to take an after-tax writedown of US$247 million, or US99cents per share.
The Vancouver-based major will record an unaudited loss for 1997 of US$260 million, or US$1.04 per share, after writedowns and dividends.
Results for the fourth quarter will be announced in mid February.
Exploration has failed to increase reserves at the Detour Lake mine, and the northern Ontario operation is scheduled to close in mid-1999. An US$18-million writedown has been taken against the carrying value and closure provisions of the mine.
In Australia, Placer’s 70%-owned Kidston mine will see a US$21-million writedown against the carrying value of its stockpiled ore and other assets.
Also on the chopping block is the company’s 80%-owned Misima operation in Papua New Guinea, where mining is scheduled to cease in 1999. A US$16-million writedown was applied against Misima’s stockpiled ore, which will noneltheless sustain milling until 2003.
Currency translation adjustments related to both the Kidston and Misima mines total US$35 million.
A US$68-million writedown was applied against part of the excess cost related to the acquisition of Australian-based Highlands Gold. Deferred development costs and other provisions make up the remaining US$89 million.
States Placer President John Willson: “We are taking the necessary measures to ensure that we maintain our strong financial position during this period of low gold prices and to preserve funding for priority exploration and quality reserve acquisitions. This will keep us well-positioned to meet our objective of achieving superior shareholder returns relative to our industry peer group.”
Placer Dome intends to reduce its overhead costs worldwide by 10% in order to streamline operations. Its 1998 exploration budget will be cut to $115 million, compared with last year’s $145 million. The company also plans to defer capital expenditures, including development of the Mulatos mine in Mexico.
The annual dividend will be cut to 10 from 30 cents per share and will be paid at six-month intervals.
Placer Dome produced 2.6 million oz. gold in 1997 at an average cash production cost of US$202 per oz., compared with the previous year’s yield of 1.9 million oz. at US$235 per oz.
Total production costs for 1997 amounted to US$282 per oz., compared with US$308 per oz. in the previous year. Placer expects cash production costs to decline to US$185 per oz. in 1998 and total costs to drop to US$260 per oz.
At year-end, proven and probable reserves stood at 31 million tonnes, based on cutoff grades that assume an average long-term price of US$375 per oz.
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