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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Groundhog who wrote (23659)	12/1/1998 7:58:00 PM
From: goldsnow	Respond to of 116764

01 December 1998 Dollars for the West Rand ON THE face of it, Placer Dome's $235m proposed purchase of a half interest in the Western Areas gold mine is a welcome first for SA. This first major entry by a North American mining group into SA's gold industry can be seen as a strong vote of confidence. But only up to a point. Placer Dome is buying half the operations of a well-established mine which is one of the few in SA with well-defined expansion potential. The Canadian company probably had few other options here; buying into an existing operation is comparatively low-risk and it adds to Placer Dome's reported gold output as well as augmenting its reserves. However, the proceeds from the sale will not necessarily land in SA for local developments. Rather, the idea is to leave it abroad for investment in foreign mining ventures where Western Areas managers' ambitions lie. They have already indicated their intention to vote their 49,5% shareholding in favour of the deal, which makes its outcome seem very much a foregone conclusion. Western Areas, the JSE-quoted company, will end up with half of its present mining interests and a $235m kitty to invest anywhere from Kazakhstan to the Pacific Ocean islands where the South Africans would be relative tyros. Placer Dome, which is already in Papua New Guinea but has burned its fingers badly in Kazakhstan, understandably prefers diversification into a relatively safe SA mine than into speculative grassroots ventures elsewhere. Naturally, Placer Dome intends to introduce its skills to Western Areas' operations. It says it has considerable experience in mechanised underground mining - something that has already been tried and ditched on geological considerations at Western Areas. The Canadians may well have something new to offer, but that something will need to be adapted to local geology as well as to local employment conditions and skills. Wringing advantages from the half-asset sale may not be a piece of cake. But the Canadians are running little risk. bday.co.za