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To: Groundhog who wrote (23648)	11/30/1998 9:57:00 PM
From: goldsnow	Read Replies (2) \| Respond to of 116756

Full story Canada's Placer Dome in South Africa gold venture 06:07 p.m Nov 30, 1998 Eastern By Scott Anderson TORONTO, Nov 30 (Reuters) - Canadian gold mining heavyweight Placer Dome (PDG.TO) Inc., braving political and social instability in South Africa, on Monday became the largest foreign investor in the country's mining industry. Placer Dome, Canada's second-biggest bullion producer, said it will pay $235 million for a 50-percent stake in one of the South Africa's biggest gold deposits. It will join local company Western Areas Ltd. (WNAJ.J) to develop the Western Areas mine and the South Deep deposit, which have combined reserves of almost 60 million ounces. ''This transaction represents another significant step forward as we continue to build a portfolio of high-quality assets for our shareholders,'' John Willson, Placer's president and chief executive, said during a teleconference call. ''Some long-life reserves have come available at attractive prices and we believe we can add value in a number of ways. This particular opportunity fits our strategy and we've responded to it.'' Since the end of apartheid, South Africa has struggled to lure investors who are worried about political risk, high crime and chronic unemployment. Willson attempted to downplay the significant political and social risks associated with the country, which is still struggling after years of upheaval. ''We have consistently said in any initial move into South Africa, we would enter gently and that our exposure would be limited. That is what we are now doing,'' he said. ''We have developed a thorough understanding of the political and social dynamic of South Africa. Our conclusion of the potential rewards of this investment far outweigh the associated risks.'' For Vancouver-based Placer, the venture will double its ore reserves to 60 million ounces and provide a strategic entry into the world's largest gold producing region. Johannesburg-based Western Areas, meantime, gains a foreign partner with expertise in mechanized mining, global ventures and deep pockets to help develop the expensive project. Placer's immediate share of production at the property in South Africa's famed Witwatersrand basin will be 300,000 ounces of gold annually, rising to 375,000 ounces when South Deep comes on stream in 2002. Peter Harris, general manager of business development at Placer, said the deal would marry Placer's experience with Western Areas's deep-mining know-how. ''We do not profess to have the deep-mining expertise that the South African mining companies have,'' he said. Placer now estimates its total gold output for 1999 at 2.9 million ounces at a cash cost of $170 per ounce. Its 14 mines in five countries are forecast to produce 2.8 million ounces of gold in 1998 at a cost of $160 per ounce. North American analysts were cautious in their comments about Placer's move into South Africa. ''It's definitely a first and they've taken a great step,'' said Daniel McConvey, an analyst at Goldman Sachs, in New York. It's something that other North Americans have had a hard time doing in terms of making a joint venture. The world will be watching to see how it works out.'' John Ing, president of Maison Placements Canada in Toronto, noted that Canadian-based Placer will bring its mining expertise to the project. ''It's very deep and costs will definitely be a factor and it's a very difficult part of the world for mining in particular.'' The movement of Placer's share price on Monday may not have been as much in reaction to the transaction as it was to a general meltdown of Canadian natural resource stocks that took most shares lower. Placer closed down C$1.25 to C$22.25 on volume of almost 1.8 million shares. In London, gold fell $1.45 to $294.70 an ounce. ($1-$1.53 Canadian) ((Scott Anderson, Reuters Toronto Newsroom, 416 941-8106, toronto.newsroom+reuters.com)) Copyright 1998 Reuters Limited.