PDG. (TSE) PDG. (ME)
Attention Business Editors:
Placer Dome acquires 50% of one of world's largest gold reserves
VANCOUVER, Nov. 30 /CNW/ - Placer Dome Inc. announces it has reached
agreement with Western Areas Limited of Johannesburg, to form a 50:50 joint
venture which will develop and operate South Deep, the largest undeveloped
gold deposit on South Africa's Witwatersrand, and operate Western Areas'
adjacent existing operation. Placer Dome will manage the joint venture.
The property contains an ore reserve of 59 million ozs. of gold, of which
South Deep accounts for 52 million ozs. A twin-shaft system to develop South
Deep has been sunk to 2,000 metres (6,500 ft.) of its ultimate depth of 3,000
metres (9,800 ft.) below surface. The estimated cost for its completion is
US$300 million.
The acquisition will double Placer Dome's ore reserves to 60 million
ozs., and generate immediate additional cash flow for the Corporation from a
long-life project. It also provides strategic entry into Africa and the
world's largest gold producing region.
To acquire its 50% interest, Placer Dome will pay Western Areas a cash
consideration of US$235 million, funded from the Corporation's cash balances,
and make further payments to Western Areas of 1.75% on 50% of annual
production for the life of the mine, plus an additional 1.75% on 50% of annual
production exceeding 1 million ozs.
Western Areas' current plans indicate that when South Deep commences
commercial production in 2002, Placer Dome's share of production from the
property will be 375,000 ozs. per year at a cash production cost of US$185/oz.
and a total cost of US$215/oz. Until that time, the existing operation will
contribute at an average rate of 300,000 ozs. of gold to Placer Dome's share
of production at an average cash production cost of US$200/oz. This production
will provide most of Placer Dome's cash requirement for its share of the
completion cost of the South Deep project.
Placer Dome now estimates it will produce 2.9 million ozs. of gold in
1999 at an average cash production cost of US$170/oz., and an average of more
than 2.8 million ozs. at a cash cost of US$180/oz. in the years 2000 to 2002.
Western Areas estimates that the property has proven and probable
reserves of 235 million tonnes of ore grading 7.8 grams of gold per tonne,
containing 59 million ozs., calculated according to the Australasian Code for
estimating reserves and resources, and at a gold price of US$260/oz.
Mining will be by a combination of mechanized and conventional methods at
depths between 2,400 metres and 3,400 metres below surface. A majority of the
South Deep reserves are suitable for mechanized bulk mining.
The transaction is subject to 60-day due diligence by Placer Dome, the
signing of definitive agreements, and to Western Areas shareholder and
regulatory approval, and is expected to close in the first quarter of 1999.
Placer Dome has received irrevocable undertakings from approximately 49% of
Western Areas shareholders to vote in favour of the transaction. On closing,
Placer Dome will immediately undertake an optimization study for the property,
aimed at developing the most effective means for managing the mine, improving
mine gold recovery and production, and developing South Deep.
John Willson, President and Chief Executive Officer, said: ''To become
The Earth's Gold Leader, it is logical we take a position in a country with a
great gold mining tradition and great gold resources. The project fits Placer
Dome's strategic focus on quality ounces. We are excited about taking on this
investment leadership role in South Africa and we are encouraged by the
welcome we have received from the government, labour and business.
''Our partnership will fully unlock the value of this large, long-life
deposit. The project will receive the full benefit of Placer Dome's global
resources and its focus on sustainable development. We are looking forward to
merging Placer Dome's global mining experience with Western Areas' South
African mining skills to form a winning combination.''
CAUTIONARY NOTE
Some of the statements contained in this news release are forward-looking
statements, such as estimates and statements that describe the Corporation's
future plans, objectives or goals, including words to the effect that the
Corporation or management expects a stated condition or result to occur. Since
forward-looking statements address future events and conditions, by their very
nature, they involve inherent risks and uncertainties. Actual results in each
case could differ materially from those currently anticipated in such
statements by reason of factors such as the productivity of the Corporation's
mining properties, changes in general economic conditions and conditions in
the financial markets, changes in demand and prices for the minerals the
Corporation produces, litigation, legislative, environmental and other
judicial, regulatory, political and competitive developments in areas in which
the Corporation operates, technological and operational difficulties
encountered in connection with the Corporation's mining activities, and labour
relations matters and costs.
Placer Dome Inc. is one of the world's largest gold mining companies,
producing more than 2.5 million ounces (78 tonnes) of gold annually at a cash
production cost that is among the lowest in the industry. The Corporation's
shares are traded under the symbol PDG on the Toronto, New York, Montreal,
Paris, Swiss and Australian stock exchanges. International Depository Receipts
for its shares are traded on the Brussels Stock Exchange.
Complete information on the Placer Dome Group is available on most
leading Databases including Stardata (CNW), Dow Jones Telerate, Bloomberg
Financial Markets, Infoglobe, Infomart or QL Systems in Canada and Dow Jones
News Retrieval, Bloomberg Financial Markets, Standard and Poors, Nexis,
Dialog, CompuServe or First Call, in the United States.
BUSINESS/PHOTO EDITORS: A copy of the Placer Dome map of the Western
Areas and South Deep project is available by fax by calling Canada NewsWire,
Vancouver at (604) 669-7764.
%SEDAR: 00002304E
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For further information: In North America, Investor Relations - Earl
Dunlop (604) 661-3779; Media Relations - Hugh Leggatt (604) 661-1554; In South
America, Investor and Media Relations - Felipe Ruiz (562) 206-6252; In
Australia, Investor and Media Relations - Ian Williams (02) 9256-3800; In
South Africa: Westcom Public Relations - Derek du Plessis (27 11) 325-4260; On
the Internet www.placerdome.com; Financial Advisor to Placer Dome: Morgan
Stanley and Co. -- Beth Mandel (27 11) 836-6672
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