Printer Friendly

Placer Dome focusses on rationalizing employment, additional cost reductions for the balance of the year.

Despite a 29-per-cent increase in gold production, Placer Dome Inc.'s first-quarter earnings fell $4 million to $11 million.

The company attributed this reduction to an eight-per-cent decline in average realized gold prices and a $6-million increase in after-tax exploration expense.

The company's consolidated gold production increased by 34 per cent, while its production costs declined by 25 per cent to $163 per ounce for the first quarter of 1992.

Gold production from Canadian mines increased by 11 per cent, while production costs declined by 10 per cent to $257 per ounce.

The company's Campbell and Dome mines achieved production cost reductions of eight and 27 per cent respectively.

As part of this cost-control effort, the company's Campbell and Sigma gold mines reduced their combined workforce by 179 employees. Placer Dome continues to consider measures to reduce costs elsewhere in its mining group.

According to the corporation, 12 of its 16 gold mines achieved a reduced average unit production cost as a result of the application of intensive measures to increase efficiency.

"Rationalization of employment levels and implementation of other cost-control programs remain key operating priorities for the corporation for the balance of the year," states Placer Dome's first-quarter report.

"Higher cost operations are closely monitored and, while operations continue as long as positive cash flows are generated, further prolonged weakness in prices in 1992 may necessitate curtailment of these operations."

Placer Dome recorded its first loss ($236.2 million) in 1991, despite producing 2.1 million ounces of gold and achieving a record low production cost of $223 per ounce. The decline was attributed to lower prices for all products.

However, a new operating plan at the Dome Mine dramatically improved its performance over 1990, with higher grades and increased gold production. This was achieved with 53-per-cent fewer employees compared to the level prior to the six-month strike in 1990.

Production costs were reduced from pre-strike levels of $440 U.S. per ounce to $312 U.S. per ounce.

The plan for Dome is to produce 147,000 ounces of gold this year. An accelerated diamond drilling program was undertaken to increase available open-pit bulk mining material.

At the company's Campbell Mine a project was initiated last year to upgrade the mine hoisting system to increase its capacity.

The modification, scheduled to be completed during the first quarter of this year, is required to provide the opportunity to increase ore production.

Production at Campbell is scheduled to increase from 1,170 tons per day to 1,340 tons per day this year for an annual rate of 483,000 tons. Gold production is expected to increase to 275,000 ounces.

The mine is expected to complete an exploration program at the 4,000-foot level late this year.

The control of costs was a major concern last year at Placer Dome's Dona Lake Mine. However, productivity improved as a result of labor reductions, productivity incentives and a change to trackless mining.

Placer Dome wrote down by $26 million the carrying value of its investment in the mine due to its short remaining life of just over two years.

A diamond drilling program will begin this year to further define the mineralization at Dona Lake.

At its Detour Lake Mine, Placer Dome intends to continue with promising exploration drilling and development undertaken in 1991.

The 1991 program resulted in the replacement of ore mined during the year and provided indications of substantial additional mineralization, the company reported.

Placer Dome says its business strategy is "our global approach to exploration and development."

"With projected strong demand for certain base metals in the long term, we believe that a combination of gold and base metal production will provide a solid platform for growth in cash flow into the next century," states Placer Dome's 1991 annual report.

"We are exploring for copper in particular, both because the metal is often found in association with gold, and because its own market characteristics remain positive."

The company says its successes in New Guinea, Australia and Chile demonstrate its ability to carry out a global strategy. It has budgeted $60 million for exploration this year.

The company's exploration projects include the Musselwhite gold property 300 miles north of Thunder Bay. As manager and 43-per-cent owner, Placer Dome continued to re-interpret and compile underground and surface geological information on the property last year.

Musselwhite is estimated to contain 12 million tons of ore grading at .176 ounces of gold per ton.
COPYRIGHT 1992 Laurentian Business Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Mining Report
Publication:Northern Ontario Business
Date:Jun 1, 1992
Previous Article:Study conducted to prove industry's contribution to the province's economy.
Next Article:Mining industry seeks an end to uncertainty created by land claims.

Related Articles
Giant Yellowknife 'doing well' in battle to reduce costs.
Slump in exploration activity in Sioux Lookout.
'Super pit' could add seventeen years to Dome.
Top 10 operating mines in Northern Ontario.
Kinross, Placer Dome join forces: partnership increases gold mining life by 20 years. (Mining).
Merger improves viability of gold deposit. (Timmins: Special Report).
Town witnesses positive economic indicators. (Communities of the North: Red Lake).
Placer aims to fill skills gap with mining school.
Joint Venture has big plans for pair of properties.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters