Placer Dome getting its balance sheet in shape check out the bolded area.
POSTED AT 12:20 AM EST Thursday, January 25
Placer Dome to take $209-million charge
Interactive
• Stock Quote/Chart: Placer Dome
By PETER KENNEDY
From Thursday's Globe
Vancouver — Weak bullion prices will force gold mining giant Placer Dome Inc. to take a $209-million (U.S.) writedown when it posts fourth-quarter results, the company said yesterday.
The prediction came as another major player, Barrick Gold Corp., said it too is cutting its price forecasts to reflect the weaker gold value, which continues to put severe pressure on producers around the world.
When Vancouver-based Placer announces its year-end results next month, the price at which its global gold reserves are calculated will be cut to $300 from $325 an ounce, chief executive officer Jay Taylor told analysts yesterday.
Barrick spokesman Vince Borg said the Toronto company has indicated it is planning similar revisions in its price forecasts but does not plan to disclose what the impact will be until Feb. 1, when its year-end earnings are released.
However, during a conference call with analysts yesterday, Mr. Taylor said the revised forecasts have forced Placer to slash its mineable gold reserves by 29 per cent from year-ago levels to 47 million ounces.
He also warned that Placer could be forced to reduce its reserves by another 5 per cent if prices don't improve.
"While we were expecting the gold price to move higher, weakness in demand and other fundamentals has increased the risk that the current gold price environment could persist for some time," he said.
Analysts said the announcement comes as no surprise.
"This is something that the company has been doing a good job of signalling to the market for some time," said Victor Flores, a gold mining analyst with HSBC Securities in Toronto.
He said Placer's stock price fell — 75 cents (Canadian) to $12.85 on the Toronto Stock Exchange yesterday — primarily because of the drop in the price of gold that also sent shares of Canada's other flagship gold company Barrick down 96 cents to $23.04 on the TSE.
The pressure on other gold miners to take similar steps grew yesterday, when the price of bullion dropped $1.80 (U.S.) to $264.30 an ounce in New York.
During yesterday's conference call, Placer's Mr. Taylor said the company is anxious to maintain a strong balance sheet in case acquisition opportunities become available.
"As a result, we are maintaining our disciplined approach to managing the impact of gold price risk on our future operating performance," he said.
After assessing its operations in light of the lower gold price, Placer said it expects fourth-quarter results will include after-tax charges of $209-million on mines in Papua New Guinea, the United States and Australia.
That will bring total writedowns for the year to $325-million when the company includes a $116-million after-tax charge on its Las Cristinas mine in Venezuela, which was announced in the second quarter of 2000.
The company said $66-million or 20 per cent of total writedowns relate to the company's Getchell gold mine in Nevada, where efforts to find additional gold reserves have been hampered by poor ground conditions. Analysts said that likely means Getchell will not be in production until 2004 at the earliest.
Still, Mr. Taylor said he is pleased that Placer has succeeded in producing three million ounces of gold for the third year in succession. As a result of the company's decision to acquire the remaining 50-per-cent stake in the Zaldivar copper mine in Chile, the company has been able to increase its total copper reserves by 48 per cent from a year ago to more than 11 billion pounds.
When Placer releases its year-end results Feb. 15, it will post a fourth-quarter loss of between 50 and 55 cents of share, said Hatham Hodaly, a mining analyst with Salman Partners Inc. in Vancouver.
That compares with a profit of $7-million or 2 cents a share in the fourth-quarter ended Dec. 31, 1999. |
