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Gold/Mining/Energy : Caussa Capital (formerly Antares) T.CAU -- Ignore unavailable to you. Want to Upgrade?

To: bill718 who wrote (2495)	2/1/1998 12:54:00 AM
From: --	Read Replies (2) \| Respond to of 4718

Saturday, January 31, 1998 Gold miners gird for year or more of low prices By PETER KENNEDY Vancouver Bureau The Financial Post Gold mining companies are bracing for a lengthy slump in the price of bullion, senior officials at Placer Dome Inc. and Newmont Gold Co. told a mining conference here Friday. "We may see a year to 18 months of depressed prices,'' said John Dow, senior vice-president at Colorado-based Newmont, which is North America's largest gold producer. "If it doesn't happen, terrific, but that is what we are girding for,'' said Eliseo Gonzalez-Urien, chief executive at the exploration division of Vancouver-based Placer Dome. Earlier this week, Placer and Newmont both announced cuts aimed at coping with low gold prices, which recently plunged to an 18 1/2-year low of US$276.80 an ounce. Newmont will reduce its annual exploration budget by 28% this year to US$77 million. The company also expects to announce a 10% reduction in its gold reserves when a study is completed in about three weeks. Dow said the new figure is based on estimates that gold prices will average US$350 an ounce this year, down from its previous US$400 estimate. Placer will take a US$247-million writedown in the fourth quarter, and reduce exploration spending by 21% to US$115 million. It expects its mineable reserves to be down 20% from last year because of low prices. While they claim demand for physical gold remains strong, Dow and Gonzalez-Urien said prices are being "artificially depressed'' by commodity funds and other hedge players that place massive bets that prices will remain low. Prices are likely to be under pressure until the new European central bank decides in May how much of its reserves will be in gold. "I can't disagree with that view,'' said Jeff Ralph, a bullion dealer with Royal Bank of Canada in Toronto. While gold rose US10› to US$302.90 an ounce in New York on Friday, Ralph doesn't foresee any quick rebound as inflation remains low and central bank sales remain what he called "a worry.'' Gold miners hope the European central bank will retain control of all bullion reserves held by member countries, once its own reserves have been set. "This will be another chilling fact for the speculators who think there's a lot of gold coming to the market,'' said Gonzalez-Urien. Meanwhile, both companies are focusing on high-grade, low-cost operations. Newmont has budgeted US$12 million for exploration around its Yanacocha gold mine in Peru. Yanacocha produced 1.1 million ounces last year at a cash cost of US$95 an ounce. It is also readying its US$1.9-billion Batu Hijau gold-copper mine in Indonesia for startup in the fourth quarter of 1999. On Friday, Newmont shares (NGC/NYSE) fell 3/16 to US$29 1/8, while Placer (PDG/TSE) closed down 70› to $19.10.