Placer Dome Inc.

views updated Jun 27 2018

Placer Dome Inc.

Box 49330 Bentall Postal Station
Suite 1600,1055 Dunsmuir St.
Vancouver, British Columbia
Canada V7X 1P1
(604) 682-7082
Fax: (604) 682-7092
Web site: http://www.placerdome.com

Public Company
Incorporated: 1910 as Dome Mines Limited; 1926 as Placer Development Limited; and 1944 as Campbell Red Lake Mines Limited
Employees: 8,300
Sales: $1.157 billion (1996)
Stock Exchanges: New York Toronto Montreal Paris
SICs: 1041 Gold Ores; 3341 Secondary Nonferrous Metals; 1021 Copper Ores

Placer Dome Inc. is an international gold mining company and North America’s largest gold producer. In 1996, it operated 16 mines in 5 countries: Canada, the United States, Australia, Chile, and Papua New Guinea and produced 2.2 million ounces of gold. Placer Dome’s share of this production amounted to 1.9 million ounces. The company also mined silver, copper, and molybdenum (used to make steel). In addition to its active mining operations, Placer Dome had exploration activities underway in 20 countries, spending on average more than $100 million each year searching for deposits.

The Creation of a New Company

Placer Dome Inc. was formed in 1987 by the amalgamation of three Canadian mining companies, creating the largest gold producer in North America with an annual output of more than 800,000 ounces of gold. Dome Mines Limited, the oldest of the three predecessors and one of Canada’s most venerable gold producers, was incorporated in 1910, following the discovery of the Dome Mine, a hard-rock mine in northern Ontario, which was still producing gold in 1997. The mine and the company got their name from the shape of the gold-studded rock structure a band of prospectors literally stumbled over in 1909.

Placer Development Limited was incorporated in British Columbia in 1926, and made its first earnings, during the 1930s, dredging gold from the gravel of a river in Papua New Guinea, then under Australian mandate. “Placer,” which was Spanish for shoal, referred to water-borne deposits of sand or gravel containing particles of gold or silver. Mining that deposit was no easy task. Because there were no roads over the mountains from the coast to the interior, the dredges had to be disassembled and then flown in. This, according to the company, resulted in what was at that point the greatest peacetime airlift ever undertaken. The Bulolo project produced gold until 1965. Between then and 1984, when its next mine was developed, the company invested in coal mining, cattle ranching, timber production, and fishing. It even established a cattle company in Papua New Guinea to provide Bulólo workers with fresh meat. By the early 1980s, Placer Development had sold off most of these interests and was focused on developing the Kidston Mine in Queensland, Australia.

The third company, Campbell Red Lake Mines Limited, was incorporated in 1944 in Ontario, and eventually became a subsidiary of Dome Mines. Its Campbell Mine, one of the highest-grade and lowest-cost gold mines in the world, has produced continuously since 1949.

The merger itself came about because both Placer and Dome Mines were threatened with hostile takeovers by Australian-based companies. Placer arranged the merger to protect itself, raising its market value from $700 million to $4.3 billion.

1987-92: Separate Managements

The type of gold mining done by the companies was not their only difference. Dome Mines and Campbell Red Lake were considered conservative operations. They concentrated on their long-term operations and did not increase their output or acquire new mines despite rising gold prices and lower production costs. Placer, on the other hand, continued to bring new mines on-stream, increasing its gold production from 45,000 ounces in 1982 to 331,000 ounces in 1986, the year before the merger.

During its first five years, Placer Dome kept the separate managements of the original companies in place, along with their conflicting business philosophies. The company did expand through acquisitions. Between 1988 and 1991, the company sold its Canadian and U.S. oil and gas operations as well as various mines, developed and constructed six new mines, and acquired several other mining properties. These acquisitions included shares in Consolidated TVX Mining Corp, which owned the La Coipa gold/silver property in Chile and the Kiena Gold Mines Limited and Sigma Mines in Canada. In 1989, Placer Dome acquired a 50 percent interest in the La Coipa gold/silver property in Chile as well as 50 percent of the shares of a newly-formed Chilean company that bought the La Coipa property from the TVX Group. In addition, the company expanded its interest in the 23-year-old Cortez Gold Mine Joint Venture in Nevada following the discovery of the Pipeline gold deposit in 1991, and in 1992, purchased 50 percent of Compania Minera Zladivar, the owner of the Zladivar copper property in Chile.

To finance its gold mines, Placer Dome often used a relatively new form of financing called a “gold loan.” As the mine developer, the company borrowed actual gold deposits from its financing institutions, not their cash. The company sold the gold to pay for building the mine and then repaid the loan in gold from production. Because the gold deposits earned little or no interest, Placer Dome was usually able to negotiate a lower, more favorable rate than if it had borrowed cash. If the rates were too high, however, Placer Dome or another developer could incorporate a new company to hold the property and the mine when it was built, then sell shares to raise the money to develop the property.

Among its other activities during this period, the company and its partners were trying to come up with an acceptable feasibility plan for extracting the gold deposits along the shore of Lake Opapimiskan in northern Ontario. The problem was that the gold was collected within a convoluted iron foundation. The debate had been going on since the Musselwhite brothers discovered the gold in 1962. One thing that was finalized, even before the project was approved for mining, was an agreement between Placer Dome and the leaders of the four First Nations (aboriginal) communities in the area. The company agreed tohire one-quarter of the mine’s workforce from the local communities, to provide other economic benefits, such as education, health care, communication, and transportation to the area during the life of the mine, and to respect both the land and the First Nations’ culture.

The issue of complex community conditions was not limited to Canada. At the Porgera mine in Papua New Guinea, the joint venture was spending approximately $10 million a year on infrastructure improvements in the region. In 1991, to help the national government channel tax and royalty revenues from the mining back into the community, Placer Dome proposed a Tax Credit Infrastructure Scheme, under which the mine held back some of the taxes owed and directly invested that amount in local improvements.

During this period, sales revenues increased from $624 million in 1987 to $1.02 billion in 1992. Earnings, however, fluctuated, and the company ended 1992 with earnings of $105 million.

1993-94: Creating a Common Goal

In 1993, John M. Willson joined Placer Dome as president and CEO. Willson came to the mining industry “genetically”—his father was a mining engineer. Born in Sheffield, England, Willson graduated from the Royal School of Mines at the University of London in 1962 and immediately went to work at the Nsuta manganese mine in Ghana. Two years later he came to the United States where he took a job in Butte, Montana, at Anaconda’s copper mine and learned “how mining should not be done,” as he related in the Placer Dome company magazine. He moved on after two and a half years to Comineo Limited’s Sullivan zinc-lead mine in Canada, “the first mine I worked at where they knew what they were doing.” Four years later, in 1971, Cominco made Willson project manager for construction and operation of its Black Angel zinc-lead mine in Greenland. When that job was completed he left the mining industry for seven years, returning to Comineo in 1981. In 1989 he was appointed president and CEO of Pegasus Gold Inc. of Spokane, Washington, a middle-rank gold producer. He held that position until Placer Dome selected him to replace retiring Tony Petrina.

Willson set about uniting the Placer Dome companies into a single unit with a common goal: higher productivity and lower costs. His aim was to have the company produce 2.5 million ounces of gold by the year 2000 (an increase of nearly 40 percent) while cutting costs by a third.

He began by starting a companywide debate about how to meld the organization’s three disparate cultures. The debate produced two strategic changes: concentrate on mining gold, reducing earnings from the company’s other minerals to 25 percent of revenues; and decentralize management into four regional units, each responsible for the mining activities in its own area. It also reinforced the importance of the company’s ’ tradition of corporate responsibility and high ethical values.

Company Perspectives:

Placer Dome is a global mining company whose primary emphasis is gold. We are committed to long-term profitable growth. The added value to our Company will be achieved by investing in our strategy, and in people whose combined skills will lead to successful exploration, property acquisition, mine development and mine operation.

We believe in integrating the efficient extraction of mineral resources with responsible environmental stewardship and providing a safe and healthy workplace for our employees.

The management reorganization established four subsidiaries: wholly-owned Placer Dome Canada, Placer Dome U.S. Inc., and Placer Dome Latin America; and publicly-owned Placer Pacific Limited, with the corporate headquarters in Vancouver overseeing strategic growth. Internally, the company flattened its structure and introduced team-building, career development, and succession planning and extended its stock option plan to retain its employees in a highly competitive industry. The concentration on gold saw the continued purchase of shares in gold companies, including all the shares of Sulphurets Gold Corp. and Continental Gold Corp. It also led to an increase in exploration costs, which by 1994 were around $100 million.

1995 to the Present

In 1995, the company completed construction of two more mines, the Zaldivar copper mine in Chile and the Osbourne gold mine in Australia, and had 85 exploration projects in 28 countries.

The year 1996 began well. The price of gold hit a six-year high of $414.80 during the first quarter, and in March, construction began on two new gold mines, the underground and open pit Musselwhite mine at Opap Lake, the first mine to be approved under Canada’s stringent Environmental Assessment Act, and the Pipeline project in Nevada.

But that same month, in the Philippines, there was an accidental discharge of 4 million tons of mill tailing at the Marcopper Mine, and that mine was closed. Although Placer Dome owned only 40 percent of the corporation operating the mine, neither the joint venture nor the major shareholder had the resources nor the interest to contribute to the cleanup. Placer Dome assumed 100 percent of the financial responsibility. Cleanup involved re-sealing a drainage tunnel that had failed and clearing the spill itself and resulted in a $43 million after tax charge to earnings.

As if that were not trouble enough, the price of gold declined for the rest of the year. Contributing factors included the strength of the U.S. dollar, movement towards a single European currency (and the fear of sales from reserves by European central banks), and gains in stock markets around the world. The main problem was that with low inflation, people put their money in investments other than gold. On the other hand, demand for gold jewelry set a new record in 1996.

In order to reach its long-term corporate goals, the company decided it needed to focus its development and mining activities on a smaller number of larger, sustainable mines. During the year, Placer Dome acquired properties in Africa, Australia, Brazil, Canada, Ecuador, Mexico, the Philippines, and Russia for investigation. Mineral systems had been identified on these and additional work was planned to confirm known gold resources while searching for more. Total exploration expenditures for 1996 came to $117 million and was expected to increase slightly to $120 million in 1997.

In December the company announced it was selling the relatively small Sigma and Kiena gold mines in Quebec as well as the Enkado molybdenum mine in British Columbia. The company ended the year with revenues at an all-time high of $1.2 billion, but with an earnings loss of $65 million, arising from the after-tax charges reflecting the mine sales and the Marcopper cleanup.

The environmental accident at Marcopper caused the company to reevaluate its participation in joint ventures. As Willson stated in a 1997 speech, “In joint ventures, the rewards of success are shared in proportion to equity interest; but unless our partners share our principles of corporate responsibility and are willing to act accordingly, we will end up bearing the full cost of any untoward event. ... It has made us more determined not to take on a minority partnership in the future, and to be more selective about the partners that we team up with.”

In line with that thinking, the company initiated takeovers of Highlands Gold Limited, a Papua New Guinea company that owned 29 percent of the Porgera Mine, and the 24.8 percent publicly-owned interest of Placer Pacific Limited. By early 1997, Placer Dome owned 50 percent of the Porgera Mine and all of Placer Pacific Limited. The company hoped this would simplify its holdings in the Asia Pacific region and to give it a greater share of the exploration potential of the area. Placer Dome also announced plans to combine two of its wholly-owned subsidiaries, Placer Dome Canada and Placer Dome U.S. Inc., to form Placer Dome North America.

In January 1997, the company bid $6.2 billion for Bre-X Minerals Ltd. of Calgary, which owned 90 percent of the Busang gold deposit in Indonesia, “the richest gold find on earth,” according to Maclean’s, with an estimated holding of 100 million ounces of gold. However, the company withdrew its bid the following month. Investigators later reported evidence that gold had been salted at the deposit.

On March 6, 1997, the first gold doré bar was poured at the Pipeline plant, three months ahead of schedule and $70 million under budget. Four days later, the first bar was poured at the Musselwhite mine, one day less than a year after construction of the mine began. Placer Dome’s Project Development Division had built two gold mines concurrently, one in Canada and one in the U.S., in a 12-month period. Production at the two mines began in April. Annual gold production at Musselwhite was expected to be 200,000 ounces, and 400,000 ounces at Pipeline.

But the year was not without controversy—over the ownership of the Las Cristinas mine in Venezuela. Crystallex International Corp., a small, Vancouver-based mining company claimed it had the rights, based on its claim to two of the deposit’s richest blocks. According to the Venezuelan mining ministry, that ownership had expired in 1989, and belonged to Venezuela. That had certainly been Placer Dome’s understanding when it formed a joint venture with a government agency earlier in the decade to develop the site. In July, the Venezuelan supreme court allowed Crystallex’s copper rights to be reviewed by the court, but prohibited a trial regarding the gold rights. While Crystallex appealed, Placer Dome took the court’s action as acknowledgement of its rights to the gold and began construction of the $576 million project in August, the 15th mine construction or expansion project since the company was formed 10 years earlier.

Whatever the legal outcome, Las Cristinas has been the site of innovative approaches to problems arising when a huge mining operation comes into an isolated, undeveloped area. At Las Cristinas the local population was a mixture of aboriginal communities and migrating, small-scale miners of mixed race and nationality. In 1995, the company instituted a program to help a group of the miners form a collective and work on a part of the project’s construction concessions under controlled conditions. The World Bank recognized that effort as a new model for reducing problems between huge mining operations and small miners. Additionally, Placer Dome was exploring new ways to create “sustainable development” of the region around the mine. In a joint venture with the Industrial Co-operation Branch of the Canadian International Development Agency, the company was attempting to involve non-governmental and for-profit organizations in both Canada and Venezuela in community development projects, such as municipal water and sewer systems and agricultural diversification, at Las Cristinas.

In July, the company announced sales of $599 million for the first six months of the year, compared with $562 million for that period in 1996. Net earnings were in the black at $32 million. Gold production was 1.168 million ounces, 25 percent higher than the year before and the average cost of production dropped significantly to $214 per ounce, compared to $246 per ounce for the first two quarters in 1996.

While the technology of gold exploration and mining has changed dramatically since the Dome Mine began operating in 1910, the high level of risk involved has not. Placer Dome appeared to be able to move quickly, selling off older, less productive mines and taking advantage of low gold prices to acquire high-quality properties. Furthermore, its new mines were exceeding production expectations and it looked likely that production in 1997 would reach 2.4 million ounces, the highest yield in its 10 years of existence, and close to Willson’s annual production goal of 2.5 million ounces by the year 2000.

Principal Subsidiaries

Placer Dome Latin America (Chile); Placer Dome North America; Placer Pacific Limited (Australia); Placer Dome Exploration, Inc.

Placer Dome Inc.

views updated May 23 2018

Placer Dome Inc.

Suite 1600, Bentall IV
1055 Dunsmuir Street
Vancouver, British Columbia
V7X 1P1
Canada
Telephone: (604) 682-7082
Fax: (604) 682-7092
Web site: http://www.placerdome.com

Public Company
Incorporated: 1987
Employees: 11,950
Sales: $1.25 billion (2002)
Stock Exchanges: New York Toronto Montreal Paris Australia Swiss
Ticker Symbol: PDG
NAIC: 212221 Gold Ore Mining; 212222 Silver Ore Mining; 212234 Copper Ore and Nickel Ore Mining; 541360 Geophysical Surveying and Mapping Services

Placer Dome Inc., the fifth largest gold mining company in the world, produces approximately 3.5 million ounces of gold annually. Based in Vancouver, British Columbia, the company also mines silver and copper and has interests in 18 mines, many outside of Canada, in countries including South Africa, Australia, the United States, and Papua New Guinea. A leader in mine exploration, Placer Dome spent about $60 million in 2003 on exploration.

The Creation of a New Company

Placer Dome Inc. was formed in 1987 by the amalgamation of three Canadian mining companies, creating the largest gold producer in North America with an annual output of more than 800,000 ounces of gold. Dome Mines Limited, the oldest of the three predecessors and one of Canada's most venerable gold producers, was incorporated in 1910, following the discovery of the Dome Mine, a hard-rock mine in northern Ontario, which was still producing gold in 1997. The mine and the company got their name from the shape of the gold-studded rock structure a band of prospectors literally stumbled over in 1909.

Placer Development Limited was incorporated in British Columbia in 1926 and made its first earnings during the 1930s, dredging gold from the gravel of a river in Papua New Guinea, then under Australian mandate. "Placer," which was Spanish for shoal, referred to water-borne deposits of sand or gravel containing particles of gold or silver. Mining that deposit was no easy task. Because there were no roads over the mountains from the coast to the interior, the dredges had to be disassembled and then flown in. This, according to the company, resulted in what was at that point the greatest peacetime airlift ever undertaken. The Bulolo project produced gold until 1965. Between then and 1984, when its next mine was developed, the company invested in coal mining, cattle ranching, timber production, and fishing. It even established a cattle company in Papua New Guinea to provide Bulolo workers with fresh meat. By the early 1980s, Placer Development had sold off most of these interests and was focused on developing the Kidston Mine in Queensland, Australia.

The merger itself came about because both Placer and Dome Mines were threatened with hostile takeovers by Australianbased companies. Placer arranged the merger to protect itself, raising its market value from $700 million to $4.3 billion.

Separate Managements: 1987–92

The type of gold mining done by the companies was not their only difference. Dome Mines and Campbell Red Lake were considered conservative operations. They concentrated on their long-term operations and did not increase their output or acquire new mines despite rising gold prices and lower production costs. Placer, on the other hand, continued to bring new mines onstream, increasing its gold production from 45,000 ounces in 1982 to 331,000 ounces in 1986, the year before the merger.

During its first five years, Placer Dome kept the separate managements of the original companies in place, along with their conflicting business philosophies. The company did expand through acquisitions. Between 1988 and 1991, the company sold its Canadian and U.S. oil and gas operations as well as various mines, developed and constructed six new mines, and acquired several other mining properties. These acquisitions included shares in Consolidated TVX Mining Corporation, which owned the La Coipa gold/silver property in Chile and the Kiena Gold Mines Limited and Sigma Mines in Canada. In 1989, Placer Dome acquired a 50 percent interest in the La Coipa gold/silver property in Chile as well as 50 percent of the shares of a newly formed Chilean company that bought the La Coipa property from the TVX Group. In addition, the company expanded its interest in the 23-year-old Cortez Gold Mine joint venture in Nevada following the discovery of the Pipeline gold deposit in 1991, and in 1992, purchased 50 percent of Compania Minera Zladivar, the owner of the Zladivar copper property in Chile.

To finance its gold mines, Placer Dome often used a relatively new form of financing called a "gold loan." As the mine developer, the company borrowed actual gold deposits from its financing institutions, not their cash. The company sold the gold to pay for building the mine and then repaid the loan in gold from production. Because the gold deposits earned little or no interest, Placer Dome was usually able to negotiate a lower, more favorable rate than if it had borrowed cash. If the rates were too high, however, Placer Dome or another developer could incorporate a new company to hold the property and the mine when it was built, then sell shares to raise the money to develop the property.

Among its other activities during this period, the company and its partners were trying to come up with an acceptable feasibility plan for extracting the gold deposits along the shore of Lake Opapimiskan in northern Ontario. The problem was that the gold was collected within a convoluted iron foundation. The debate had been going on since the Musselwhite brothers discovered the gold in 1962. One thing that was finalized, even before the project was approved for mining, was an agreement between Placer Dome and the leaders of the four First Nations (aboriginal) communities in the area. The company agreed to hire one-quarter of the mine's workforce from the local communities, to provide other economic benefits, such as education, healthcare, communication, and transportation to the area during the life of the mine, and to respect both the land and the First Nations' culture.

During this period, sales revenues increased from $624 million in 1987 to $1.02 billion in 1992. Earnings, however, fluctuated, and the company ended 1992 with earnings of $105 million.

Creating a Common Goal: 1993–94

In 1993, John M. Willson joined Placer Dome as president and CEO. Willson came to the mining industry "genetically"—his father was a mining engineer. Born in Sheffield, England, Willson graduated from the Royal School of Mines at the University of London in 1962 and immediately went to work at the Nsuta manganese mine in Ghana. Two years later he moved to the United States, where he took a job in Butte, Montana, at Anaconda's copper mine and learned "how mining should not be done," as he related in the Placer Dome company magazine. He moved on after two and a half years to Cominco Limited's Sullivan zinc-lead mine in Canada, "the first mine I worked at where they knew what they were doing." Four years later, in 1971, Cominco made Willson project manager for construction and operation of its Black Angel zinc-lead mine in Greenland. When that job was completed he left the mining industry for seven years, returning to Cominco in 1981. In 1989 he was appointed president and CEO of Pegasus Gold Inc. of Spokane, Washington, a middle-rank gold producer. He held that position until Placer Dome selected him to replace retiring Tony Petrina.

He began by starting a companywide debate about how to meld the organization's three disparate cultures. The debate produced two strategic changes: concentrate on mining gold, reducing earnings from the company's other minerals to 25 percent of revenues; and decentralize management into four regional units, each responsible for the mining activities in its own area. It also reinforced the importance of the company's tradition of corporate responsibility and high ethical values.

Company Perspectives:

Placer Dome is one of the world's largest gold mining companies, operating 18 mines on five continents. Our shares trade on five stock exchanges and we employ more than 13,000 people around the world.

Placer Dome is committed to long-term profitable growth through focused exploration; disciplined acquisitions; and investments in research and technology. We believe in integrating the efficient extraction of mineral resources with responsible environmental stewardship and providing a safe and healthy workplace for our employees.

The management reorganization established four subsidiaries: wholly owned Placer Dome Canada, Placer Dome U.S. Inc., Placer Dome Latin America, and publicly owned Placer Pacific Limited, with the corporate headquarters in Vancouver overseeing strategic growth. Internally, the company flattened its structure and introduced team-building, career development, and succession planning and extended its stock option plan to retain its employees in a highly competitive industry. The concentration on gold saw the continued purchase of shares in gold companies, including all the shares of Sulphurets Gold Corporation and Continental Gold Corporation. It also led to an increase in exploration costs, which by 1994 were around $100 million.

Continued Expansion: Mid-1990s

In 1995, the company completed construction of two more mines, the Zaldivar copper mine in Chile and the Osbourne gold mine in Australia, and had 85 exploration projects in 28 countries.

The year 1996 began well. The price of gold hit a six-year high of $414.80 per ounce during the first quarter. In March, construction began on two new gold mines, the underground and open pit Musselwhite mine at Opap Lake, the first mine to be approved under Canada's stringent Environmental Assessment Act, and the Pipeline project in Nevada.

But that same month, in the Philippines, there was an accidental discharge of four million tons of mill tailing, or waste, at the Marcopper Mine, and that mine was closed. Although Placer Dome owned only 40 percent of the corporation operating the mine, neither the joint venture nor the major shareholder had the resources or interest to contribute to the cleanup. Placer Dome assumed 100 percent of the financial responsibility. Cleanup involved re-sealing a drainage tunnel that had failed and clearing the spill itself and resulted in a $43 million aftertax charge to earnings.

As if that were not trouble enough, the price of gold declined for the rest of the year. Contributing factors included the strength of the U.S. dollar, movement toward a single European currency (and the fear of sales from reserves by European central banks), and gains in stock markets around the world. The main problem was that with low inflation, people put their money in investments other than gold. On the other hand, demand for gold jewelry set a new record in 1996.

To reach its long-term corporate goals, the company decided it needed to focus its development and mining activities on a smaller number of larger, sustainable mines. During the year, Placer Dome acquired properties in Africa, Australia, Brazil, Canada, Ecuador, Mexico, the Philippines, and Russia for investigation. Mineral systems had been identified on these and additional work was planned to confirm known gold resources while searching for more. Total exploration expenditures for 1996 came to $117 million and was expected to increase slightly to $120 million in 1997.

In December the company announced it was selling the relatively small Sigma and Kiena gold mines in Quebec as well as the Enkado molybdenum mine in British Columbia. The company ended the year with revenues at an all-time high of $1.2 billion, but with an earnings loss of $65 million arising from the after-tax charges reflecting the mine sales and the Marcopper cleanup.

The environmental accident at Marcopper caused the company to reevaluate its participation in joint ventures. As Willson stated in a 1997 speech, "In joint ventures, the rewards of success are shared in proportion to equity interest; but unless our partners share our principles of corporate responsibility and are willing to act accordingly, we will end up bearing the full cost of any untoward event… . It has made us more determined not to take on a minority partnership in the future, and to be more selective about the partners that we team up with."

In line with that thinking, the company initiated takeovers of Highlands Gold Limited, a Papua New Guinea company that owned 29 percent of the Porgera Mine, and the 24.8 percent publicly owned interest of Placer Pacific Limited. By early 1997, Placer Dome owned 50 percent of the Porgera Mine and all of Placer Pacific Limited. The company hoped this would simplify its holdings in the Asia Pacific region and give it a greater share of the exploration potential of the area. Placer Dome also announced plans to combine two of its wholly owned subsidiaries, Placer Dome Canada and Placer Dome U.S. Inc., to form Placer Dome North America.

In January 1997, the company bid $6.2 billion for Bre-X Minerals Ltd. of Calgary, which owned 90 percent of the Busang gold deposit in Indonesia, "the richest gold find on earth," according to Maclean's, with an estimated holding of 100 million ounces of gold. The company withdrew its bid the following month, however. Investigators later reported evidence that gold had been salted at the deposit.

On March 6, 1997, the first gold doré bar was poured at the Pipeline plant, three months ahead of schedule and $70 million under budget. Four days later, the first bar was poured at the Musselwhite mine, one day less than a year after construction of the mine began. Placer Dome's Project Development Division had built two gold mines concurrently, one in Canada and one in the United States, in a 12-month period. Production at the two mines began in April. Annual gold production at Musselwhite was expected to be 200,000 ounces, and 400,000 ounces at Pipeline.

Key Dates:

1910:: Dome Mines Limited, a gold producer, is established.
1926:: Placer Development Limited forms in British Columbia and begins gold mining activities in Papua New Guinea.
1944:: Ontario-based Campbell Red Lake Mines Limited is incorporated.
1987:: Dome Mines Limited, Placer Development Limited, and Campbell Red Lake Mines Limited merge to create Placer Dome Inc.
2002:: Placer Dome acquires AurionGold Limited, an Australian mining company.

But the year was not without controversy: there was a question of rightful ownership of the Las Cristinas mine in Venezuela. Crystallex International Corporation, a small, Vancouver-based mining company, claimed it had the rights, based on its claim to two of the deposit's richest blocks. According to the Venezuelan mining ministry, that ownership had expired in 1989, and belonged to Venezuela. That had certainly been Placer Dome's understanding when it formed a joint venture with a government agency earlier in the decade to develop the site. In July, the Venezuelan supreme court allowed Crystallex's copper rights to be reviewed by the court, but prohibited a trial regarding the gold rights. While Crystallex appealed, Placer Dome took the court's action as acknowledgment of its rights to the gold and began construction of the $576 million project in August, the 15th mine construction or expansion project since the company was formed ten years earlier.

Whatever the legal outcome, Las Cristinas has been the site of innovative approaches to problems arising when a huge mining operation comes into an isolated, undeveloped area. At Las Cristinas the local population was a mixture of aboriginal communities and migrating, small-scale miners of mixed race and nationality. In 1995, the company instituted a program to help a group of the miners form a collective and work on a part of the project's construction concessions under controlled conditions. The World Bank recognized that effort as a new model for reducing problems between huge mining operations and small miners. In addition, Placer Dome was exploring new ways to create "sustainable development" of the region around the mine. In a joint venture with the Industrial Co-operation Branch of the Canadian International Development Agency, the company was attempting to involve nongovernmental and forprofit organizations in both Canada and Venezuela in community development projects, such as municipal water and sewer systems and agricultural diversification, at Las Cristinas.

While the technology of gold exploration and mining has changed dramatically since the Dome Mine began operating in 1910, the high level of risk involved has not. Placer Dome appeared to be able to move quickly, selling off older, less productive mines and taking advantage of low gold prices to acquire high-quality properties. Furthermore, its new mines were exceeding production expectations. In 1997 the company's gold production increased 34 percent, and its ore reserves rose to 31 million ounces, the seventh consecutive year of growth. In addition, Placer Dome was able to cut production costs significantly; in 1996 gold production costs were $235 per ounce, and the following year they were $202 per ounce.

Despite increases in production, Placer Dome faced a net loss of $264 million for fiscal 1997. The net loss was primarily due to write-downs of mining interests. Net sales increased to $1.09 billion compared with 1996 sales of $1.06 billion.

Increased Production and Cost Cutting: Late 1990s and into the New Millennium

Although the price of gold continued to slump in the late 1990s, Placer Dome remained committed to gold as its primary focus. The company's strategy was to lower operating and production costs as much as possible while boosting exploration and seeking strategic acquisitions of high-yield, high-quality mines. Placer Dome allotted approximately $115 million to fund exploration in 1998 alone, making the company the industry leader.

Placer Dome wasted no time putting the exploration monies to work, and in February 1998 the company acquired a 51 percent interest in Chile's Aldebaran gold-copper property in a deal with Bema Gold and Arizona Star. The following year Placer Dome increased its holdings in Africa when it established a joint venture with Western Areas Ltd. of South Africa to develop the Western Areas gold mine, which included the South Deep region, the country's largest undeveloped deposit. The transaction marked the first major foreign investment in South Africa's mining industry since the African National Congress assumed governmental power in 1994. Placer Dome anticipated that following development of South Deep by 2003, the joint venture would produce about 750,000 ounces of gold annually. It was estimated that the Western Areas holdings included a reserve of 59 million ounces of gold, with 52 million ounces at South Deep.

At the close of 1998 Placer Dome acquired the Getchell Gold Corporation of Nevada. Getchell Gold operated Nevada's Getchell and Turquoise Ridge underground gold mines and estimates placed its gold reserves at 14.8 million ounces. Placer Dome planned to implement an aggressive exploration and development strategy in hopes of increasing gold inventory to 20 million ounces by the end of 1999. The Getchell acquisition and the Western Areas joint venture cost Placer Dome more than $1.3 billion.

To stay competitive in a climate that remained unfriendly to gold, Placer Dome faced a few bumps. In the summer of 1999 the company halted development at its Las Cristinas mine in Venezuela and also closed down production at Nevada's Turquoise Ridge for a year. The money saved from these costcutting measures could now be channeled to further exploration or development of new acquisitions if necessary.

Placer Dome's financials improved considerably in the late 1990s. Net earnings for 1998 reached $50 million on net sales of $1.12 billion, a marked improvement compared with the net loss of $264 million in 1997. Although net earnings dropped to $35 million in 1999, net sales rose to $1.16 billion. In addition, Placer Dome's gold output in 1999 reached 3.15 million ounces, and its gold reserves were estimated at 66 million ounces, with the South Deep mine accounting for nearly half of that total.

As Placer Dome headed into the new millennium, the company faced new challenges and changes. John Willson retired at the end of 1999, and Jay K. Taylor became president and CEO. Taylor outlined his goals for Placer Dome in his letter to shareholders in the 1999 annual report, noting that the company would continue with a disciplined financial approach and seek high-yield acquisitions.

Sales increased to a record $1.4 billion in 2000, but Placer Dome reported a net loss of $92 million; the company adjusted its asset values to take into account low gold prices, and it was hit with a $116 million charge for writing off its investment in the Las Cristinas mine. In August 2001, the year Las Cristinas was originally slated to begin production, Placer Dome decided to sell its 70 percent stake.

Although Placer Dome reported a net loss of $133 million on sales of $1.22 billion in 2001, the company maintained a positive outlook on its performance, noting that both cash flow from operations and mine operating earnings were strong. In addition, were it not for the write-down of mining interests, the company's net earnings would have been $133 million. Many of Placer Dome's mines produced favorable results as well: the Granny Smith joint venture in Australia began operation ahead of schedule; and the Cortez joint venture in Nevada produced more than one million ounces of gold at some of the lowest costs in the industry.

Placer Dome made waves across the mining industry in 2002 with the acquisition of Australia's AurionGold Limited. The deal, which made the company the fifth largest gold producer in the world, included full ownership of the Granny Smith mine, 75 percent ownership of the Porgera mine, and the Kanowna Belle, Henty, and Kalgoorlie West mines. The acquisition was estimated to boost Placer Dome's yearly gold production an additional one million ounces for a decade.

Also in 2002 Placer Dome entered into a joint venture with Kinross Gold Corporation. The resulting Porcupine Joint Venture involved the underground and surface exploration of the Pamour pit in Canada. Help from the Granny Smith mine, which boosted production 57 percent, and the Cortez mine, which produced more than one million ounces of gold for the fifth straight year, led to total gold production of 2.8 million ounces in 2002. Sales reached $1.2 billion, and net earnings totaled $116 million.

Placer Dome had a welcome surprise in 2003 with the discovery of a new mineral deposit through the Cortez joint venture in Nevada. Exploration estimates set the gold resources at the new Cortez Hills site at 4.5 million ounces. Excitement brewed as well with the acquisition of East African Gold Mines Limited, an Australian company. The sale included the North Mara mine in Tanzania, with reserves estimated at 4.25 million ounces.

The company reported record gold production of more than one million ounces during the third quarter of 2003. CEO Taylor announced in a press release, "Consistent with our strategy of optimizing assets, our operations performed well this quarter, and we remain on track to achieve the highest annual production in our history." For the first nine months of 2003, sales were $1.27 billion, compared with $854 million for the same period of 2002, and gold production reached 2.8 million ounces, compared with 1.9 million ounces in 2002. Placer Dome's focused efforts to reduce costs and boost assets to create a leaner and stronger company appeared to be paying off, and the company had no plans to change its strategy.

Principal Subsidiaries

Placer Dome Latin America (Chile); Placer Dome U.S. Inc.; Placer Dome North America; Placer Dome Asia Pacific Limited (Australia); Placer Dome Exploration, Inc.; Placer Dome (CLA) Limited; Placer Dome America Holding Corporation; Getchell Gold Corporation.