Placer Dome reported second quarter results of $0.08 per share on gold production of 908,000 ounces at a cash cost of $229 per ounce. For this year, Placer Dome is in line to produce 3.6 million ounces of gold and 400 million pounds of copper at a cash cost $230 per ounce. Like other senior producers, Placer's problem is the replacement of reserves. Development work at Getchell's Turquoise Ridge is slower than the company expected. South Deep in South Africa continues to be a disappointment producing only 51,000 ounces at a cash cost of $399 per ounce. South Deep remains an albatross for Placer and the South African rand is going the wrong way. Noteworthy is that until the shaft is deepened there will be no impact on production which is a problem since the bulk of Placer's reserves are in South Africa.
On a positive note, however, Placer released an update on Cortez Hills in Nevada, which could be a company maker. Placer boosted reserves at Cortez Hills from 3.2 million ounces to 4.5 million ounces and the company expects to complete a feasibility study by year-end. The Cortez Hill discovery is close to the Pipeline facility and this high-grade deposit can be brought on stream fairly quickly. As of June 30th, 94 holes were completed with assays received from 72 holes. So far the high-grade zone is open to the west and down depth and the company has yet to define the limits of this discovery. Of interest is that there is a possibility that this deposit can link up with nearby Pediment, which would add to the reserve picture. While it is still early days, we believe Cortez could add about $2.00 per share to Placer's NAV. At Pueblo Viejo in the Dominican Republic, Placer also gave clarity to its program. Pueblo Viejo is a refractory deposit and the company expects to produce a prefeasibilty study by the end of this year. Placer like Barrick has reduced its hedges but the company still has almost 10 million ounces under hedge, which is three years of production hedged - too high. The mark-to-market loss is $307 million. With the exciting Cortez Hills discovery and the prospect of bringing Pueblo Viejo on stream, Placer has offset the difficulties in South Africa and we recommend the shares at current levels.
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On a positive note, however, Placer released an update on Cortez Hills in Nevada, which could be a company maker. Placer boosted reserves at Cortez Hills from 3.2 million ounces to 4.5 million ounces and the company expects to complete a feasibility study by year-end. The Cortez Hill discovery is close to the Pipeline facility and this high-grade deposit can be brought on stream fairly quickly. As of June 30th, 94 holes were completed with assays received from 72 holes. So far the high-grade zone is open to the west and down depth and the company has yet to define the limits of this discovery. Of interest is that there is a possibility that this deposit can link up with nearby Pediment, which would add to the reserve picture. While it is still early days, we believe Cortez could add about $2.00 per share to Placer's NAV. At Pueblo Viejo in the Dominican Republic, Placer also gave clarity to its program. Pueblo Viejo is a refractory deposit and the company expects to produce a prefeasibilty study by the end of this year. Placer like Barrick has reduced its hedges but the company still has almost 10 million ounces under hedge, which is three years of production hedged - too high. The mark-to-market loss is $307 million. With the exciting Cortez Hills discovery and the prospect of bringing Pueblo Viejo on stream, Placer has offset the difficulties in South Africa and we recommend the shares at current levels.
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