Placer expands its Asian gold ventures

Placer expands its Asian gold ventures

SYDNEY (Reuter): Placer Pacific Ltd expects to have a greater proportion of its gold operations outside Australia in future as it steps up its overseas exploration program, corporate communications manager Ian Williams said.

Placer has a joint venture with its parent, Placer Dome Inc of Canada, to explore for gold in the Asia Pacific region with particular focus on Indonesia and the Philippines.

"We believe that the chances of finding the ore bodies of the size that we need to make a difference are much greater in those areas then they are in Australia," Williams told Reuters.

"I am not saying that we are not still looking at Australia, but we think the opportunities are greater there," he said.

Placer mined more than 60 percent of its 770,196 ounces of gold production during 1995 in Papua New Guinea through its 25 percent interest in the giant Porgera mine and its wholly owned Misima Island operation.

In Australia, Placer owns 60 percent of the Granny Smith mine in Western Australia, 100 percent of Osborne, and the Kidston mine, both in Queensland, through its 70 percent owned Kidston Gold Mines Ltd.

Williams said Placer was looking for mines the size of its existing mines, which have annual production of between 150,000 and around one million ounces, in the case of Porgera.

To get a 50,000 or 100,000 ounce project up is not going to make much difference to Placer Pacific, Williams said.

"We want ones the size of Kidston, Granny Smith, Misima. Or Porgera would be even better. But in Australia, sure there are still opportunities to find those but it is pretty tough competition to secure the ground," Williams said.

He said a lot of the ground was already taken up in Australia and it had been looked at time and time again.

Placer plans to spend up to A$30 million on exploration during 1996, with A$11 million spent in the Asia Pacific, A$5 to A$6 million in PNG and the rest in Australia.

In 1995, Placer spent A$26 million on exploration.

Last month, Placer closed out 700,000 ounces of its gold hedging position which reduces its forward sales program to 1.1 million ounces and increases the average price per ounce to US$473 from US$455.

Williams said the group had hedged up to 50 percent of production out to five years, including forward selling, put options, call options and also currency.

"Our objectives are to maintain production at around three quarters of a million ounces over the next four years and keep costs in low one-third of world averages," Williams said.

Williams said output forecasts were dependent on Porgera.

He said underground mining at Porgera was scheduled to close at the end of 1997.

He added Porgera was expected to produce 940,000 ounces in 1996 and slightly less than that in 1997 while output in 1998 should fall by about "10 percent."

Placer was floated in 1986 by Placer Dome, but Williams said it was always possible that Placer Pacific could be bought out.

"It is not an issue at the moment, but I can't say that it won't be in a year's time, or two years time or five years time," Williams said in response to a question on whether Placer Dome could buy out the rest of its Australian offshoot.

"It is a trend now with the RTZ and CRA move, so there are companies that are doing this. I can't say that they (Placer Dome) would never do it," he said.

Placer shares are now trading around three year lows after the recent fall in the bullion price and a strong Australian dollar. It was trading at A$1.73 at 0450 GMT on Monday.