PDG Pendragon Plc

Placer Dome earns $284 million in 2004 (United States ("U.S.") dollars, in accordance with U.S. generally accepted accounting principles ("GAAP")) VANCOUVER, Feb. 23 /PRNewswire-FirstCall/ -- Placer Dome Inc.(1) (NYSE, TSX, ASX: PDG) today announces 24% growth in earnings in 2004 to $284 million, or $0.68 per share, and 27% growth in cash from operations to $376 million, or $0.90 per share. 2004 earnings were impacted by a number of tax items resulting in a net tax recovery of $130 million. Sales revenue increased 7% to $1.89 billion on gold production of 3.65 million ounces and copper production of 413 million pounds. Gold cash and total costs were $240 and $298 per ounce, respectively, while copper cash and total costs were $0.55 and $0.70 per pound, respectively. Mine operating earnings increased 19% to $484 million. For the fourth quarter, gold production totalled 927,000 ounces and copper production was 93.4 million pounds. Sales revenue in the quarter was $460 million, while mine operating earnings were $78 million. Net earnings totalled $39 million, or $0.09 per share and cash from operations was $44 million, or $0.10 per share. Cash and total costs in the fourth quarter were $264 and $330 per ounce for gold and $0.64 and $0.82 per pound for copper, respectively. Both the fourth quarter and full-year 2004 earnings were impacted by non-cash write-downs and tax items as described in the Detailed Review of Financial Results section of this document. Commenting on the results, President and CEO Peter Tomsett said, "The operating results met our expectations. Overall, our assets continue to perform well as we exceeded both our gold and copper production targets. Cost pressures on the industry remain a reality. We have taken steps to mitigate the impact on our business of further strengthening of the Canadian and Australian dollars." Under Placer Dome's precious metals sales program, the company realized an average price of $391 per ounce of gold in 2004, $18 per ounce below the average spot price during the year. In the fourth quarter the company realized $398 per ounce compared to an average gold spot price of $434. During 2004, Placer Dome reduced the maximum committed ounces under its gold sales program by 1.5 million ounces to 9.0 million ounces or 15% of 2004 year-end gold mineral reserves. To mitigate the impacts of strengthening currencies, the company has protected approximately 50% of its 2005 Canadian and Australian dollar cost exposures through a purchase call program that augmented existing Australian dollar hedge positions. ----------------------------- (1) Throughout this document, "Placer Dome" is defined to be collectively Placer Dome Inc., its consolidated subsidiaries and its proportionate share of unincorporated joint venture interests. "Placer Dome's share" and "the Corporation's share" are defined to include the proportionate share of results of incorporated joint ventures and exclude minority shareholders' interests. "The Corporation" and "the company" refer to Placer Dome Inc. Highlights ------------------------------------------- Fourth quarter Twelve months ------------------------------------------- 2004(2) 2003(2,3) 2004(2) 2003(2,3) ------------------------------------------------------------------------- Sales ($millions) 460 492 1,888 1,763 Mine operating earnings ($millions) 78 128 484 406 Net earnings ($millions) 39 81 284 229 per share ($)(4) 0.09 0.20 0.68 0.56 Cash from operations ($millions) 44 29 376 297 per share ($) 0.10 0.06 0.90 0.73 ------------------------------------------------------------------------- Gold production (000s ozs) 927 1,039 3,652 3,861 Cash costs ($/oz)(4) 264 229 240 218 Total costs ($/oz)(4) 330 284 298 274 ------------------------------------------------------------------------- Copper production (millions lbs) 93 111 413 425 Cash costs ($/lb)(4) 0.64 0.53 0.55 0.52 Total costs ($/lb)(4) 0.82 0.67 0.70 0.67 ------------------------------------------------------------------------- Consistent with its strategy of optimizing assets, the company completed development projects at a number of mines, including completion of the South Deep shaft project, the North Mara mill expansion in Tanzania and the Turquoise Ridge mine in Nevada. Additionally, production at the Golden Sunlight and Bald Mountain mines will ramp up in the year as stripping programs at each site are completed. In addition to the Pamour and Raleigh developments in progress, the company approved the $40 million development of the open pit Gokona deposit at the North Mara mine in Tanzania. The Gokona deposit hosts approximately two million ounces of gold mineral reserves. Ore from the deposit is expected to be delivered to the mill in November of this year. Mr. Tomsett said significant progress was made in 2004 on advancing the company's development projects. "The Cortez Hills deposit in Nevada entered the feasibility stage due to successful exploration results during the year. The pre-feasibility study of the Pueblo Viejo project in the Dominican Republic has been completed and we are moving ahead with a feasibility study on the mine. The Cerro Casale project in Chile has advanced to a stage where financeability is being considered. Subject to Placer Dome's internal approval processes, we expect to make a decision on whether to develop each of these projects by the end of 2005." Placer Dome's estimated proven and probable mineral reserves at the end of 2004 were 59.9 million ounces of gold (refer to the Mineral Reserves and Mineral Resources tables for further details). The additions prior to allowance for depletion during the year were primarily due to additional mineral reserve discoveries and reclassification at Cortez, including Cortez Hills, and increases at other mines, including Porgera, Porcupine, North Mara and Bald Mountain. The mineral reserve increases were partially offset by mineral reserve decreases at South Deep, Turquoise Ridge and Granny Smith primarily due to increased costs and resulting higher cut-off grades and remodeling. Gold reserves were estimated at a long-term price of $350 per ounce. Proven and probable copper mineral reserves totalled 6.5 billion pounds at the end of 2004. ----------------------------- (2) During the second quarter of 2004, Placer Dome changed its accounting policy, retroactive to January 1, 2004, with respect to deferred stripping to exclude the recording of liabilities on the balance sheet. The cumulative effect of this change through December 31, 2003, was to increase earnings on an after tax basis by $4 million ($0.01 per share). (3) Also during the second quarter of 2004, Placer Dome changed its accounting policy, prospectively from April 1, 2004, with respect to mineral rights to reclassify them from intangible to tangible assets. Due to this change in accounting policy, Placer Dome has ceased amortization of the excess of the carrying value over the estimated residual value of these assets and accounts for them according to its accounting policy for property, plant and equipment. If this change had been adopted January 1, 2003, it would have increased Placer Dome's earnings on a pre and after tax basis in the following periods: for 2003 by $10 million ($0.02 per share) and $7 million ($0.02 per share), respectively; for the fourth quarter of 2003 by 3 million ($0.01 per share) and 2 million ($nil per share), respectively, and for the first quarter of 2004 by $3 million ($0.01 per share) and $2 million (nil per share), respectively. (4) Cash from operations per share and cash and total production costs per ounce and pound are non-GAAP measures that do not have any standardized meaning as prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other entities. Please refer to the Non-GAAP Measures section for further detail. During the fourth quarter the company raised $452 million through a successful equity offering. Placer Dome closed the year in a strong liquidity position having over $1 billion in cash and short-term investments. Exploration and Development Projects(5) The Cortez Hills project on the 60% owned Cortez Joint Venture property in Nevada encompasses a high-grade open pit exploration discovery made in 2003, combined with an adjacent lower grade deposit known as the Pediment deposit. Exploration activities continued throughout the year, with a feasibility study on the project commencing in the third quarter of 2004. More than 150 holes were drilled in 2004 of which about 60% were targeted at resource definition, 30% at resource expansion and 10% at condemnation drilling to allow for planning of infrastructure sites. Exploration during the year was successful in further defining a steeply dipping high-grade deposit amenable to open pit mining and has identified a shallow dipping, high-grade mineral resource that will be investigated for mining with underground techniques. The open-pit portion of the deposit is sufficiently defined to allow for feasibility study work to be completed on the deposit. The deposit remains open at depth to the west. At December 31, 2004 Placer Dome's share of the Cortez Hills proven and probable gold mineral reserve was 4.4 million ounces consisting of 3.4 million ounces proven (20.2 million tonnes at average grade of 5.25 g/t) and 1.0 million ounces probable (8.5 million tonnes at average grade of 3.50 g/t), an increase of 1.2 million ounces from year-end 2003. The mineral reserve estimate is reduced slightly from mid-year as geotechnical work has resulted in a flattening of some of the pit wall angles leading to a shallower open pit. A portion of the mineral reserves have been reclassified as mineral resources. Geotechnical work will continue in the first half of 2005 and will include assessing the potential for steepening pit walls. The potential to extract pit bottom mineral resources from underground will also be assessed at a later date. The feasibility study on the deposit is scheduled for completion during the second half of the year and is examining, among other issues, optimal mining configurations, transportation of ore to the Pipeline mill and the merits of expanding the Pipeline mill. Development and condemnation drilling will continue as part of the Cortez Hills/Pediment development. Limited exploration on the Cortez Hills deposit will occur in 2005. Placer Dome has budgeted more than $8 million in 2005 for continued feasibility study work on Cortez Hills/Pediment. As part of the exploration of the overall deposit, the joint venture is examining the merits of driving an exploration drift from a nearby existing Cortez open pit to allow for more effective exploration of underground targets. A decision on this issue is expected in the third quarter of 2005. The Pueblo Viejo project is assessing the viability of mining a 15 million ounce refractory gold mineral resource from an historic mining area in the Dominican Republic. Placer Dome acquired 100% of the project through an agreement with the Dominican government in 2002. Placer Dome has completed a pre-feasibility study on the Pueblo Viejo property that contemplates a conventional open pit mining operation, sourcing ore from the Monte Negro and the Moore deposits. The processing circuit selected for the study consists of a standard crushing and grinding circuit followed by whole ore pressure oxidation with a conventional carbon-in-leach cyanide leach circuit to recover the gold. The processing plant capacity is anticipated at approximately 15,000 tonnes per day. Capital costs for the mine are estimated at between $800 million and $850 million, including a 15% contingency of approximately $100 million. Production from the mine is estimated at approximately 800,000 ounces of gold annually over the first six years of the mine life, and between 600,000 and 650,000 ounces per year over a 17-year mine life. Cash costs are estimated to average approximately $200 per ounce over the life of the mine, including royalties payable to the Dominican government. ----------------------------- (5) The qualified person responsible for scientific or technical information concerning development projects is Alfred L. Hills, P.Eng., Vice-President, Evaluations. Mineral resources that have not been classified as mineral reserves do not have demonstrated economic viability. Cash costs are estimated to average approximately $200 per ounce over the life of the mine, including royalties payable to the Dominican government. Placer Dome is moving the project to feasibility study with completion expected in the second half of 2005. Power supply is a key issue that remains to be fully addressed during the feasibility study. Power costs used in the pre-feasibility study were based on an owned coal-fired power plant being constructed near existing power facilities on the south coast of the country. The capital cost to build a 125 megawatt power plant is estimated at $175 million to $200 million and is not included in the above capital cost estimate. A number of owned and third party alternatives for power supply are being studied. The Cerro Casale project contemplates mining a large gold-copper porphyry deposit in the Andean highlands in Chile. Cerro Casale is one of the world's largest undeveloped gold and copper deposits, owned indirectly by Placer Dome (51%), Bema Gold Corporation (24%) and Arizona Star Resource Corp. (25%). Placer Dome acquired its interest in 1998 for a cash payment, funding of a feasibility study and the commitment to fund up to $1.3 billion for construction of the mine. Placer Dome completed a feasibility study on the project in 2000. At the time the project was not economic. The feasibility study was updated for then contemporary capital and operating cost estimates in early 2004. Placer Dome issued a certificate to its partners in late September 2004 indicating that it had commenced or is continuing to use reasonable efforts to arrange financing for the project on commercially reasonable and customary terms in accordance with the financing requirements of the shareholders' agreement. Subject to the terms of the shareholders' agreement, Placer Dome has until the end of 2005 to arrange such financing. Since that time, the focus of efforts has been on the commercial arrangements for the project. These specifically include the above referenced financing, power supply contracts and off take arrangements. A technical review of the project is also under way, examining optimization opportunities. Additionally, the capital and operating costs for the project are being reviewed to assess any impact of continued cost inflation. Placer Dome's share of Cerro Casale's estimated measured and indicated mineral resources is 13.0 million ounces of gold and 3.3 billion pounds of copper. The project contemplates a large-scale open pit mine that could produce (Placer Dome's share) approximately 500,000 ounces of gold and 65,000 tonnes of copper per year over an 18-year mine life. Based on work completed in January 2004, capital costs for the project were estimated at $1.65 billion, on a 100% basis. Assuming a copper price of $0.95 per pound, Cerro Casale's cash costs were projected at approximately $115 per ounce of gold (net of copper credits). Total costs, including amortization and depreciation of capital, were projected at approximately $225 per ounce. The Donlin Creek project contemplates an open pit operation mining a large refractory gold deposit in southwest Alaska. Placer Dome owns 30% of the project and is earning an additional 40% by funding $32 million of exploration and development, completing a feasibility study, and making a decision to build a mine to produce at least 600,000 ounces of gold per year (on a 100% basis). Placer Dome's share of the project's measured and indicated gold mineral resource and inferred gold mineral resource, assuming 70% ownership, is 7.8 million ounces and 10.0 million ounces, respectively. Work in 2004 consisted of a preliminary assessment on the viability and economics of the project. Based on this work, Placer Dome is committing $11 million to the development of the project in 2005. About half of the funds will be used for drilling to reclassify a portion of the inferred gold mineral resource to a measured and indicated gold mineral resource. Work on design concepts, infrastructure planning, power supply and geotechnical requirements are also ongoing. Baseline environmental studies are being completed in order to commence the permitting process later this year. In north-central British Columbia, a pre-feasibility study is expected to commence shortly on the Mount Milligan project, a large gold-copper porphyry deposit containing estimated measured and indicated mineral resources of 5.6 million ounces of gold and 1.7 billion pounds of copper (refer to the Mineral Resources - Exploration and Development Properties table in this document for further details). During 2005, the focus of activities will include additional conventional metallurgical test work and an investigation of new concentrate processing options. A decision will be made in 2005 on whether a feasibility study is warranted. Outlook for 2005 Placer Dome's share of gold production in 2005 is expected to total approximately 3.7 million ounces, slightly above 2004 levels as the resumption of milling at Golden Sunlight and increased production from North Mara and Granny Smith are expected to offset lower production from Cortez. Cash costs for gold are forecast between $250 and $260 per ounce, and total costs are expected to be in the $315 to $325 per ounce range, assuming prevailing foreign exchange rates, energy costs and other input costs. Copper production for 2005 is expected to be 410 to 420 million pounds, lower than previous 2005 production guidance of 430 million pounds, but in line with 2004 levels as higher recoveries at Zaldivar are expected to offset decreased production at Osborne. Cash costs are expected to be in the range of $0.60 to $0.65 per pound, and total costs are forecast at $0.75 to $0.80 per pound assuming prevailing foreign exchange rates and continuing high input and shipping costs. Consolidated capital expenditures, including pre-stripping, are anticipated to be approximately $260 million in 2005. Major investments include $40 million at North Mara for the Gokona Pit development, $24 million at Cortez for mobile equipment and further development of Cortez Hills, $15 million at Porcupine for the continued development of the Pamour open pit mine and underground development at the Hoyle Pond mine, $11 million at South Deep for underground development and infrastructure, $8 million at Kanowna Belle for mine development and $7 million for development at Osborne. In addition, Placer Dome's share of deferred stripping expenditures in 2005 is anticipated to be approximately $35 million. Exploration expenditures in 2005 are anticipated to be approximately $90 million, up from $77 million in 2004. About $60 million of this total will be allocated to exploration activities within an economic radius of existing mine sites, with the highest spending levels at Cortez, Campbell, Kanowna Belle, Kalgoorlie West, North Mara and Granny Smith. Placer Dome also plans to spend approximately $55 million in 2005 on resource development, technology advancement, gold marketing and other related items. The largest component, $23 million, relates to its development project portfolio. Before allowance for non-cash stock-based compensation, expenditures on general and administrative items are forecast to be approximately $72 million in 2005, up from $64 million in 2004 due to the continued strength of currencies against the U.S. dollar and additional information technology support expenditures. In 2005, Placer Dome expects to reduce the committed ounce position of its precious metals sales program to 7.5 million ounces of gold by delivering into maturing contracts. Detailed Review of Financial Results Earnings Consolidated net earnings for the year and three months ended December 31, 2004 were $284 million or $0.68 per share and $39 million or $0.09 per share, respectively, compared with earnings of $229 million or $0.56 per share and $81 million or $0.20 per share for the same periods in 2003. In 2004, net earnings included a non-cash $34 million foreign currency translation loss relating to the closure of the Misima mine, and a write-down of mining assets and restructuring charges totalling $14 million after-tax. In 2004, Placer Dome's net earnings were impacted by an unrealized non-hedge derivative loss of $7 million (2003 - gain of $30 million and 2002 - gain of $8 million). Net earnings for 2004 were increased by a non-cash after-tax adjustment of $4 million as a result of a change in accounting policy with respect to deferred stripping to exclude the recording of liabilities on the balance sheet. The 2003 net earnings included a non-cash decrease in after-tax earnings of $17 million, the effect of the adoption of a new accounting standard relating to accounting for post-mining related asset retirement obligations. Net earnings for 2002 included a non-cash after-tax charge of $8 million as a result of a change in accounting policy with respect to depreciation and depletion of property, plant and equipment at certain mining operations to exclude the effect of future estimated mining and development costs. During the third quarter of 2004, Placer Dome recognized an after-tax gain of $76 million relating to the reversal of a previously accrued tax and interest liability for Ontario mining taxes as a result of a decision by the Ontario Court of Appeal which ruled in favour of Placer Dome. Also during 2004, earnings were favourably impacted by the recognition of an $88 million non-cash tax gain primarily for previously unrecorded tax benefits in Australia, an amount that is estimated more likely than not to be realized beyond 2004. These adjustments primarily reflect a more positive operational outlook in Australia and Papua New Guinea including an improved gold price environment. During 2004 the Canadian dollar appreciated 8% against the U.S. dollar resulting in an increase in the net Canadian deferred tax assets and a deferred tax recovery of $19 million. Placer Dome's net earnings for 2003 were positively impacted by the recognition in the second and fourth quarters of a non-cash tax asset totalling $111 million for previously unrecorded tax benefits related to its U.S. operations, an amount that is estimated more likely than not to be realized beyond 2003. The recognition reflected a more positive outlook for Placer Dome's U.S. operations including an improved gold price environment. This was partially offset by non-cash foreign exchange losses on deferred tax liabilities denominated in foreign currencies which appreciated against the U.S. dollar during 2003 and the recording of provisions for known tax contingencies where, in the judgment of the Corporation, it was probable that a liability had been incurred. During the fourth quarter of 2004, certain tax issues were resolved favourably, resulting in reductions in accruals for tax contingencies for a net reduction in tax expense of $13 million. As well, during the fourth quarter the Australian and Canadian dollars strengthened 9% and 5%, respectively against the U.S. dollar resulting in a net deferred tax asset increase and deferred tax recovery of $19 million. Net earnings for the fourth quarter of 2003 were positively impacted by the recognition of a $72 million non-cash tax asset for previously unrecorded tax benefits related to Placer Dome's U.S. operations, an amount that is estimated more likely than not to be realized beyond 2003. The recognition reflected a more positive outlook for Placer Dome's U.S. operations, including an improved gold price environment. This was partially offset by non-cash foreign exchange losses on deferred tax liabilities denominated in foreign currencies which appreciated against the U.S. dollar during 2003, and the recording of provisions for known tax contingencies where, in the judgment of the Corporation, it was probable that a liability had been incurred. In the fourth quarter of 2004, a write-down of mining assets and restructuring charges totalled $14 million ($10 million after tax). Mine asset write-downs of $11 million were primarily the result of obsolescence due to technological changes. Restructuring charges of $3 million were incurred, primarily related to the South Deep mine, due to a restructuring and reduction in the work force. Cash from Operations Cash from operations for the year and three months ended December 31, 2004 were $376 million and $44 million, respectively, compared with $297 million and $29 million for the same periods in 2003. The increase for the year of 27% from 2003 primarily reflected higher cash mine operating earnings, partially offset by increased expenditures on deferred stripping, and non-mine operating costs (including exploration and resource development, technology and other). The increase for the fourth quarter of 52% from 2003 primarily relates to changes in working capital, partially offset by lower cash mine operating earnings, higher general and administrative and exploration costs. Forward Sales Under Placer Dome's precious metals sales program, the Corporation realized an average price of $391 per ounce of gold in 2004, and $398 per ounce in the fourth quarter of 2004, $18 and $36 per ounce, respectively, below the average spot price during the periods. During 2004, Placer Dome reduced the maximum committed ounces under its gold sales program by 1.5 million ounces to 9.0 million ounces. At December 31, 2004, Placer Dome's maximum committed ounces under its gold sales program were 15% of 2004 year-end gold mineral reserves. On December 31, 2004, based on the closing spot price of gold of $438 per ounce and an Australian and Canadian to U.S. dollar exchange rate of $1.2814 and $1.2036, respectively, the mark-to-market value of the precious metals sales and derivative program was negative $775 million. For the copper sales and currency derivative programs, the mark- to-market of forward and option contracts on December 31, 2004, was negative $38 million (based on a spot copper price of $1.488 per pound) and positive $51 million (based on an AUD/USD foreign exchange rate of 1.2814 and a Canadian to U.S. dollar foreign exchange rate of 1.2036), respectively. Other Income Statement Items Costs related to general and administrative, exploration, technology, resource development and other totalled $204 million and $63 million in the year and three-month periods ended December 31, 2004, respectively, an increase of $13 million and $17 million from the prior comparative periods. The $13 million and $2 million increase in general and administrative costs in year and fourth quarter of 2004, respectively, compared to 2003, were due to the negative impact of the weakening of the U.S. dollar and the increased corporate activity. The $12 million increase in the fourth quarter for resource development, technology and other was primarily due to a reduction of $9 million in the fair value of the Turquoise Ridge reclamation accrual in the fourth quarter of 2003 and increased activity on the development projects. Exploration expense for the year was $1 million higher in 2004 than 2003, but $3 million higher in the fourth quarter due to timing of expenditures. In the year and fourth quarter of 2004, a write-down of mining assets and restructuring charges totalled $20 million ($14 million after-tax), $14 million ($10 million after-tax). Various mining assets became obsolete, primarily as a result of technological changes, resulting in $16 million and $11 million of write-offs in the year and fourth quarter, respectively. Restructuring charges of $4 million and $3 million were incurred in the year and fourth quarter respectively, primarily at the South Deep mine due to the restructuring and reduction of the work force. Fourth Quarter 2004 Mine operating earnings for the fourth quarter of 2004 were $78 million, a decrease of 39% or $50 million over the comparative period in 2003 due to lower contributions from gold. Consolidated gold production in the fourth quarter decreased by 11% to 902,000 ounces from 1,011,000 ounces in 2003 due to the temporary closure at Golden Sunlight as the mine develops stage 5B, the closure of the Misima mine late in the second quarter of 2004, and reduced production from the Kalgoorlie West operations. This was partially offset by higher production from the Porgera and Granny Smith mines. Placer Dome's share of cash and total production costs per ounce for the fourth quarter of 2004 were $264 and $330, respectively, compared with $229 and $284 in 2003. The increase was due primarily to the continued appreciation of foreign currencies against the U.S. dollar ($10 per ounce), rising global energy costs ($6 per ounce), lower production, higher input commodity prices and mine-site specific issues. The average exchange rate of the Canadian and Australian dollars, Papua New Guinean kina, Chilean peso and South African rand to the U.S. dollar appreciated 8%, 6%, 11%, 5% and 11%, respectively, from the fourth quarter of 2003 to 2004. Gold operating earnings were $53 million in the fourth quarter of 2004 compared with $112 million in the fourth quarter of 2003 due to lower sales volumes and price realized, and higher unit costs. Gold sales revenue for the quarter was $355 million compared with $402 million in the prior year period, a decrease of 12% reflecting an 11% decrease in sales volume and a $4 per ounce decrease in the average realized price. The average realized sales price in the fourth quarter of 2004 decreased $4 per ounce compared with the prior year period. The $43 per ounce increase in the average spot gold price was more than offset by the impact of a change in contribution from Placer Dome's precious metals sales program to negative $32 million in the fourth quarter 2004 from positive $7 million in the fourth quarter of 2003. Copper operating earnings of $32 million in the fourth quarter of 2004 were 45% higher than the prior-year period due primarily to a 29% higher realized price per pound, partially offset by decreased sales and increased costs. Copper sales revenue for the quarter was $105 million compared with $89 million in the 2003 period, reflecting the increase in the average realized price partially offset by an 11% decrease in sales volume and a negative contribution from metal hedging of $22 million compared to $5 million in the prior-year quarter. Consolidated copper production in the fourth quarter of 2004 was 93 million pounds (42,356 tonnes), 16% less than the prior-year period as Zaldivar ore had a high sulphide copper content, which slowed the recovery of copper, and Osborne experienced production shortfalls early in the fourth quarter. Consolidated cash and total production costs per pound of copper for the period were $0.64 and $0.82, respectively, compared with $0.53 and $0.67, respectively, in 2003. The increase was due primarily to higher energy costs, the appreciation of the Australian dollar and the Chilean peso against the U.S. dollar, and lower production. Review of Mining Operations ------------------------------------------------------------------------- PRODUCTION AND OPERATING SUMMARY ------------------------------------------------------------------------- For the twelve months ended December 31 ------------------------------------------------ Placer Dome's Share Placer Mine ---------------------------------- Dome's share operating Millfeed (% of mine earnings (000s Grade Recovery Mine production) (1) tonnes) (g/t,%) (%) ------------------------------------------------------------------------- GOLD Canada Campbell 100% 2004 $ 14 446 15.3 95.7 2003 $ 21 363 17.6 96.1 ------------------------------------------------------------------------- Musselwhite 68% 2004 10 992 5.3 95.8 2003 4 905 5.5 95.5 ------------------------------------------------------------------------- Porcupine 51% 2004 20 2,038 3.4 91.9 2003 22 2,106 3.7 92.4 ------------------------------------------------------------------------- United States Bald Mountain(3) 100% 2004 2 2,019 0.8 - 2003 8 4,125 0.7 - ------------------------------------------------------------------------- Cortez(3)(4)(5) 60% 2004 125 22,899 1.2 - 2003 114 14,399 1.8 - ------------------------------------------------------------------------- Golden Sunlight(6) 100% 2004 1 - - - 2003 52 2,245 4.0 82.1 ------------------------------------------------------------------------- Turquoise Ridge(7) 75% 2004 (1) 323 13.5 90.4 100% 2003 8 211 14.3 95.7 ------------------------------------------------------------------------- Australia Granny Smith 100% 2004 (10) 4,434 2.1 89.3 2003 11 3,955 2.5 88.8 ------------------------------------------------------------------------- Henty 100% 2004 17 288 16.0 96.4 2003 3 289 11.4 95.6 ------------------------------------------------------------------------- Kalgoorlie West 100% 2004 (1) 3,053 2.7 95.6 2003 (4) 3,438 3.8 95.2 ------------------------------------------------------------------------- Kanowna Belle 100% 2004 22 1,900 4.4 89.4 2003 21 1,909 4.9 89.0 ------------------------------------------------------------------------- Osborne(8) 100% 2004 - 1,533 1.0 82.3 2003 - 1,485 1.0 80.5 ------------------------------------------------------------------------- Papua New Guinea Misima(9) 80% 2004 6 1,850 0.8 87.5 2003 4 4,471 0.7 87.6 ------------------------------------------------------------------------- Porgera 75% 2004 126 4,691 5.8 88.4 2003 42 4,242 5.3 87.6 ------------------------------------------------------------------------- Chile La Coipa(10) 50% 2004 15 3,282 1.1 81.2 2003 10 3,208 1.2 83.6 ------------------------------------------------------------------------- South Africa South Deep 50% 2004 (5) 1,100 6.2 97.2 2003 4 979 7.2 96.9 ------------------------------------------------------------------------- Tanzania North Mara(11) 100% 2004 25 2,128 3.4 92.0 2003 7 869 3.4 93.5 ------------------------------------------------------------------------- Metal hedging loss 2004 (63) 2003 54 ------------------------------------------------------------------------- Currency hedging gain 2004 15 2003 - ------------------------------------------------------------------------- TOTAL GOLD 2004 $ 303 2003 $ 371 ------------------------------------------------------------------------- COPPER Osborne(8) 100% 2004 30 1,533 2.7 93.9 2003 4 1,485 3.0 96.0 ------------------------------------------------------------------------- Zaldivar(3) 100% 2004 229 18,169 1.0 - 2003 56 16,942 1.1 - ------------------------------------------------------------------------- Metal hedging loss 2004 (57) 2003 (5) ------------------------------------------------------------------------- TOTAL COPPER 2004 $ 202 2003 $ 55 ------------------------------------------------------------------------- Other(1) 2004 (21) 2003 (20) ------------------------------------------------------------------------- CONSOLIDATED MINE 2004 $ 484 OPERATING EARNINGS(1) 2003 $ 406 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PRODUCTION AND OPERATING SUMMARY ------------------------------------------------------------------------- For the twelve months ended December 31 Estimated annual 2005 ---------------------------------------------------- Placer Dome's Share ---------------------------------------------------- Placer Production Cost per Cost per Dome's share --------------- unit(2) Production unit(12) (% of mine (ozs, % ($/oz, $/lb) (ozs, ($/oz, $/lb) Mine production) 000s lbs) change Cash Total 000s lbs) Cash Total ------------------------------------------------------------------------- GOLD Canada Campbell 100% 2004 209,045 +6% 276 344 200,000 285 365 2003 197,114 202 264 ------------------------------------------------------------------------- Musselwhite 68% 2004 163,386 +8% 269 345 165,000 275 355 2003 151,422 250 330 ------------------------------------------------------------------------- Porcupine 51% 2004 201,710 -13% 236 310 185,000 255 335 2003 233,101 206 262 ------------------------------------------------------------------------- United States Bald Mountain (3) 100% 2004 46,685 -48% 349 379 90,000 330 380 2003 90,601 228 279 ------------------------------------------------------------------------- Cortez(3), (4),(5) 60% 2004 630,801 -1% 162 201 515,000 185 225 2003 639,241 135 172 ------------------------------------------------------------------------- Golden Sunlight (6) 100% 2004 2,419 -99% - - 90,000 265 335 2003 234,946 143 151 ------------------------------------------------------------------------- Turquoise Ridge(7) 75% 2004 126,921 +37% 343 352 150,000 280 300 100% 2003 92,965 215 220 ------------------------------------------------------------------------- Australia Granny Smith 100% 2004 267,267 -5% 354 440 325,000 310 420 2003 280,129 246 320 ------------------------------------------------------------------------- Henty 100% 2004 143,064 +40% 170 283 110,000 210 335 2003 102,070 204 308 ------------------------------------------------------------------------- Kalgoorlie West 100% 2004 262,553 -34% 335 418 250,000 350 430 2003 396,254 271 364 ------------------------------------------------------------------------- Kanowna Belle 100% 2004 237,291 -10% 254 316 245,000 280 360 2003 262,889 204 283 ------------------------------------------------------------------------- Osborne(8) 100% 2004 41,630 +11% - - 40,000 - - 2003 37,357 - - ------------------------------------------------------------------------- Papua New Guinea Misima(9) 80% 2004 40,522 -57% 275 281 - - - 2003 94,837 276 310 ------------------------------------------------------------------------- Porgera 75% 2004 764,809 +20% 192 228 720,000 255 295 2003 638,940 256 301 ------------------------------------------------------------------------- Chile La Coipa(10) 50% 2004 90,932 -9% 231 300 100,000 245 325 2003 99,637 208 291 ------------------------------------------------------------------------- South Africa South Deep 50% 2004 214,293 -3% 394 437 230,000 350 400 2003 220,371 301 342 ------------------------------------------------------------------------- Tanzania North Mara(11) 100% 2004 208,484 +133% 230 289 290,000 230 320 2003 89,525 225 301 ------------------------------------------------------------------------- Metal hedging loss 2004 2003 ------------------------------------------------------------------------- Currency hedging gain 2004 (4) (4) 2003 - - ------------------------------------------------------------------------- TOTAL GOLD 2004 3,651,812 -5% 240 298 3,650,000- 250- 315- 3,750,000 260 325 2003 3,861,399 218 274 ------------------------------------------------------------------------- COPPER Osborne(8) 100% 2004 87,404 -7% 0.69 0.84 80,000 0.91 1.04 2003 93,638 0.56 0.69 ------------------------------------------------------------------------- Zaldivar(3) 100% 2004 325,406 -2% 0.51 0.66 332,000 0.55 0.68 2003 331,720 0.51 0.66 ------------------------------------------------------------------------- Metal hedging loss 2004 2003 ------------------------------------------------------------------------- TOTAL COPPER 2004 412,810 -3% 0.55 0.70 410,000- 0.60- 0.75- 420,000 0.65 0.80 2003 425,358 0.52 0.67 ------------------------------------------------------------------------- Other(1) 2004 2003 ------------------------------------------------------------------------- CONSOLIDATED MINE 2004 OPERATING EARNINGS(1) 2003 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PRODUCTION AND OPERATING SUMMARY ------------------------------------------------------------------------- For the Fourth Quarter ----------------------------------------------- Placer Dome's Share Placer Mine ---------------------------------- Dome's share operating Millfeed (% of mine earnings (000s Grade Recovery Mine production) (1) tonnes) (g/t,%) (%) ------------------------------------------------------------------------- GOLD Canada Campbell 100% 2004 $ 3 106 15.6 95.4 2003 $ 9 96 16.5 96.9 ------------------------------------------------------------------------- Musselwhite 68% 2004 4 243 5.6 96.1 2003 2 241 5.5 95.2 ------------------------------------------------------------------------- Porcupine 51% 2004 4 509 3.1 91.6 2003 8 519 4.0 92.1 ------------------------------------------------------------------------- United States Bald Mountain(3) 100% 2004 - 689 0.8 - 2003 3 117 0.7 - ------------------------------------------------------------------------- Cortez(3) (4)(5) 60% 2004 26 5,692 1.2 - 2003 27 4,224 1.3 - ------------------------------------------------------------------------- Golden Sunlight(6) 100% 2003 16 502 4.3 79.7 ------------------------------------------------------------------------- Turquoise Ridge(7) 75% 2004 (3) 101 13.1 90.2 100% 2003 5 86 15.0 94.4 ------------------------------------------------------------------------- Australia Granny Smith 100% 2004 (5) 1,152 2.7 89.9 2003 - 1,028 2.8 90.5 ------------------------------------------------------------------------- Henty 100% 2004 3 72 13.9 95.8 2003 2 70 14.2 97.2 ------------------------------------------------------------------------- Kalgoorlie West 100% 2004 (5) 755 2.4 95.0 2003 1 819 4.4 95.2 ------------------------------------------------------------------------- Kanowna Belle 100% 2004 8 470 5.0 88.5 2003 7 501 4.9 88.7 ------------------------------------------------------------------------- Osborne(8) 100% 2004 - 330 0.6 80.1 2003 - 360 1.3 82.1 ------------------------------------------------------------------------- Papua New Guinea Misima(9) 80% 2003 3 1,183 0.4 87.6 ------------------------------------------------------------------------- Porgera 75% 2004 34 1,191 5.5 90.5 2003 17 1,108 5.0 87.6 ------------------------------------------------------------------------- Chile La Coipa(10) 50% 2004 4 831 1.4 79.4 2003 6 858 1.7 81.4 ------------------------------------------------------------------------- South Africa South Deep 50% 2004 1 292 6.5 97.2 2003 (1) 272 6.2 96.9 ------------------------------------------------------------------------- Tanzania North Mara(11) 100% 2004 9 605 3.9 90.5 2003 6 518 3.5 92.9 ------------------------------------------------------------------------- Metal hedging loss 2004 (32) 2003 7 ------------------------------------------------------------------------- Currency hedging gain 2004 6 2003 - ------------------------------------------------------------------------- TOTAL GOLD 2004 $ 53 2003 $ 112 ------------------------------------------------------------------------- COPPER Osborne(8) 100% 2004 1 330 2.7 90.3 2003 2 360 3.3 96.7 ------------------------------------------------------------------------- Zaldivar(3) 100% 2004 53 4,398 0.9 - 2003 25 3,875 1.2 - ------------------------------------------------------------------------- Metal hedging loss 2004 (22) 2003 (5) ------------------------------------------------------------------------- TOTAL COPPER 2004 $ 32 2003 $ 22 ------------------------------------------------------------------------- Other(1) 2004 (7) 2003 (6) ------------------------------------------------------------------------- CONSOLIDATED MINE 2004 $ 78 OPERATING EARNINGS(1) 2003 $ 128 ------------------------------------------------------------------------- ------------------------------------------------------------------------- PRODUCTION AND OPERATING SUMMARY ------------------------------------------------------------------------- For the Fourth Quarter ------------------------------------ Placer Dome's Share ------------------------------------ Placer Production Cost per Dome's share -------------------- unit(2) (% of mine (ozs, % ($/oz, $/lb) Mine production) 000s lbs) change Cash Total ------------------------------------------------------------------------- GOLD Canada Campbell 100% 2004 50,708 +2% 354 422 2003 49,487 211 246 ------------------------------------------------------------------------- Musselwhite 68% 2004 43,637 +9% 280 350 2003 40,123 250 333 ------------------------------------------------------------------------- Porcupine 51% 2004 45,409 -26% 257 338 2003 61,031 189 239 ------------------------------------------------------------------------- United States Bald Mountain(3) 100% 2004 11,102 -34% 426 469 2003 16,725 188 261 ------------------------------------------------------------------------- Cortez(3)(4)(5) 60% 2004 130,096 -7% 181 232 2003 140,513 156 197 ------------------------------------------------------------------------- Golden Sunlight(6) 100% 2003 53,812 136 148 ------------------------------------------------------------------------- Turquoise Ridge(7) 75% 2004 38,863 +2% 406 418 100% 2003 38,259 199 204 ------------------------------------------------------------------------- Australia Granny Smith 100% 2004 93,030 +19% 399 483 2003 78,425 269 366 ------------------------------------------------------------------------- Henty 100% 2004 32,630 +5% 200 337 2003 31,136 183 294 ------------------------------------------------------------------------- Kalgoorlie West 100% 2004 55,726 -47% 402 533 2003 105,292 277 361 ------------------------------------------------------------------------- Kanowna Belle 100% 2004 65,870 -13% 257 308 2003 75,342 209 293 ------------------------------------------------------------------------- Osborne(8) 100% 2004 7,579 -37% - - 2003 12,059 - - ------------------------------------------------------------------------- Papua New Guinea Misima(9) 80% 2003 23,226 288 319 ------------------------------------------------------------------------- Porgera 75% 2004 204,110 +18% 200 247 2003 172,945 267 306 ------------------------------------------------------------------------- Chile La Coipa(10) 50% 2004 25,156 -27% 223 287 2003 34,447 188 269 ------------------------------------------------------------------------- South Africa South Deep 50% 2004 59,757 +10% 384 429 2003 54,280 365 406 ------------------------------------------------------------------------- Tanzania North Mara(11) 100% 2004 63,027 +20% 218 280 2003 52,371 229 288 ------------------------------------------------------------------------- Metal hedging loss 2004 2003 ------------------------------------------------------------------------- Currency hedging gain 2004 (7) (7) 2003 - - ------------------------------------------------------------------------- TOTAL GOLD 2004 926,700 -11% 264 330 2003 1,039,473 229 284 ------------------------------------------------------------------------- COPPER Osborne(8) 100% 2004 17,932 -30% 0.98 1.23 2003 25,638 0.56 0.66 ------------------------------------------------------------------------- Zaldivar(3) 100% 2004 75,446 -12% 0.56 0.72 2003 85,425 0.52 0.67 ------------------------------------------------------------------------- Metal hedging loss 2004 2003 ------------------------------------------------------------------------- TOTAL COPPER 2004 93,378 -16% 0.64 0.82 2003 111,063 0.53 0.67 ------------------------------------------------------------------------- Other(1) 2004 2003 ------------------------------------------------------------------------- CONSOLIDATED MINE 2004 OPERATING EARNINGS(1) 2003 ------------------------------------------------------------------------- Notes to the Production and Operating Summary Tables: (1) Mine operating earnings represent 100% of the results of mines owned by Placer Dome and its subsidiaries and a pro-rata share of joint ventures. "Consolidated operating earnings" (and the related sub-totals) in accordance with accounting principles generally accepted in the U.S. exclude the pro-rata share of La Coipa, a non-controlled incorporated joint venture. Mine operating earnings comprises sales, at the spot price, less cost of sales including reclamation costs, depreciation and depletion for each mine, in millions of U.S. dollars. Pursuant to SFAS 109 - Accounting for Income Taxes, on business acquisitions, where differences between assigned values and tax bases of property, plant and equipment acquired exist, Placer Dome grosses up the property, plant and equipment values to reflect the recognition of the deferred tax liabilities. Other mine operating earnings includes a charge of $13 million (2003 - $9 million) and $5 million (2003 - $3 million) for the twelve and three months ended December 31, 2004, respectively, related to the amortization of the gross up of the property, plant and equipment allocation. These balances include $6 million (2003 - $5 million) for Porgera, $3 million (2003 - $1 million) for North Mara, $1 million (2003 - $2 million) for Kalgoorlie West, $1 million (2003-$1 million) for Zaldivar, and $1 million (nil in 2003) for each of Kanowna Belle and Henty. The fourth quarter balances include $3 million (2003 - $1 million) for Porgera, $1 million (2003 - nil) for North Mara, $1 million (2003 - nil) for Kalgoorlie West, and nil (nil in 2003) for each of Zaldivar, Kanowna Belle and Henty. (2) Components of Placer Dome's share of cash and total production costs in accordance with the Gold Institute Standard: ------------------------------------------- December 31 ------------------------------------------- Fourth quarter Twelve months ------------------------------------------- 2004 2003 2004 2003 $/oz $/oz $/oz $/oz ------------------------------------------------------------------------- Direct mining expenses 262 230 238 208 Stripping and mine development adjustment (14) (13) (15) (3) Third party smelting, refining and transportation 1 1 1 1 By-product credits (1) (2) (1) (1) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash operating costs per ounce 248 216 223 205 ------------------------------------------------------------------------- Royalties 15 12 15 12 Production taxes 1 1 2 1 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total cash costs per ounce 264 229 240 218 ------------------------------------------------------------------------- Depreciation 35 37 30 34 Depletion and amortization 25 19 23 19 Reclamation and mine closure 6 (1) 5 3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Total production costs per ounce 330 284 298 274 ------------------------------------------------------------------------- (3) Recovery percentage is not susceptible to accurate measurement at heap leach operations. (4) During the second quarter of 2004, Placer Dome changed its accounting policy, retroactive to January 1, 2004, with respect to deferred stripping to exclude the recording of liabilities on the balance sheet. The cumulative effect of this change through December 31, 2003, was to increase earnings on an after tax basis by $4 million ($0.01 per share). (5) The Cortez mine processes material by way of carbon-in-leach ("CIL") and heap leaching. ---------------------------------------------- Millfeed Grade Recovery Production (000s tonnes) (g/t) (%) ozs ------------------------------------------------------------------------- Carbon-in-leach For the 12 months ended December 31 2004 1,856 5.4 88.3 285,645 2003 2,071 6.5 89.8 390,087 For the fourth quarter of 2004 456 3.8 87.7 48,798 2003 526 5.6 89.1 84,374 ------------------------------------------------------------------------- Heap leach For the 12 months ended December 31 2004 20,789 0.7 Note 3 297,371 2003 12,049 0.9 Note 3 198,107 For the fourth quarter of 2004 5,170 0.7 Note 3 66,492 2003 3,697 0.8 Note 3 56,095 ------------------------------------------------------------------------- Sale of carbonaceous ore For the 12 months ended December 31 2004 254 6.8 86.6 47,785 2003 278 6.7 85.1 51,047 For the fourth quarter of 2004 66 7.9 89.1 14,806 2003 - - - 44 ------------------------------------------------------------------------- Total For the 12 months ended December 31 2004 22,899 1.2 Note 3 630,801 2003 14,398 1.8 Note 3 639,241 For the fourth quarter of 2004 5,692 1.0 Note 3 130,096 2003 4,223 1.4 Note 3 140,513 ------------------------------------------------------------------------- (6) Production from Golden Sunlight was suspended in December 2003 and recommenced in January 2005 when ore was delivered from stages 5B and 2B. (7) Production from Turquoise Ridge relates to third party ore sales. On December 23, 2003, Placer Dome and Newmont Mining Corporation formed the Turquoise Ridge Joint Venture. Results prior to this represent 100% of the mine's results, and 75% thereafter. The cash and total cost per ounce balances do not include the cost of processing the ore. (8) Osborne produces copper concentrate with gold as a by-product. Therefore, gold unit costs are not applicable. (9) Silver is a by-product at the Misima mine. For the twelve and three months ended December 31, 2004, Placer Dome's share of Misima's production was 162,000 and nil ounces of silver, respectively, compared with 433,000 and 85,000 ounces for the respective prior- year periods. Mining was completed at Misima in May 2001, but processing of stockpiles continued until May 2004. (10) Gold and silver are accounted for as co-products at La Coipa mine. Gold equivalent ounces are calculated using a ratio of the silver market price to gold market price for purposes of calculating costs per equivalent ounce of gold. The equivalent ounces of gold produced at La Coipa were 151,064 and 42,830 ounces, respectively for the twelve and three month periods ended December 31, 2004 and 154,519 and 44,463 ounces, respectively, for the comparative period year periods. At La Coipa, production for silver was 3.7 million and 0.9 million ounces for the twelve and three months ended December 31, 2004, respectively, and 4.1 million and 0.8 ounces for the comparative prior-year periods. (11) On July 23, 2003, Placer Dome completed the acquisition of East African Gold, which owns 100% of the open pit North Mara mine in northern Tanzania. (12) Estimated 2005 annual unit costs for the Canadian, Australian, Papua New Guinean and South Deep mines are based on Canadian and Australian dollar, Papua New Guinean kina, Chilean peso and South African rand exchange rates to the U.S. dollar of 1.2048, 1.2821, 3.03, 600, and 6.00 to 1, respectively. Any change from these exchange rates would have an impact on the unit costs. At December 31, 2004 these exchange rates were 1.2036, 1.2847, 3.05, 556, and 5.66 to 1, respectively. Quarterly Review of Mining Operations Canada Production at the Campbell mine in the fourth quarter of 2004, at 50,708 ounces, was 2% above 2003 levels, as higher tonnage more than offset lower grades and recoveries. Cash costs per ounce, at $354, increased 68% from the prior-year period primarily due to the processing of increased tonnage of lower grade ore, increased development work and the stronger Canadian dollar. Annual gold production in 2005 is expected to be 4% lower than 2004 due to anticipated lower grade. Cash costs per ounce are expected to be 3% higher than 2004 levels due to lower production and the stronger Canadian dollar. Placer Dome's share of production in fourth quarter of 2004 for the Porcupine Joint Venture, was 45,409 ounces, 26% lower than 2003 due to lower grades and recoveries. This reflects lower production from the Dome underground which closed as planned in late May 2004, partially offset by increased production from the lower grade Dome open pit. Cash costs per ounce, at $257, were negatively impacted by the lower production levels and the stronger Canadian dollar. Gold production in 2005 is expected to be 8% lower than 2004 due to the planned closure of the Dome open pit in the third quarter of 2005, offset partially by the production from the lower-grade Pamour pit. Overburden removal at the Pamour pit commenced in the fourth quarter of 2004 with gold production expected to start in the third quarter 2005. Cash costs per ounce are expected to be 8% higher than in 2004 due to lower production levels and the continued strength of the Canadian dollar. United States Placer Dome's share of production from the Cortez mine in fourth quarter of 2004, at 130,096 ounces, was 7% below 2003 as increases in heap leach production due to increased tonnage were more than offset by lower heap leach grade and lower CIL production due to lower grades. Unit cash production costs at $181 per ounce were 16% above 2003 levels, primarily due to lower CIL grades and an increased proportion of production from relatively lower grade heap leach ore. Annual gold production in 2005 is expected to be 18% lower than 2004 primarily due to lower CIL and heap leach grades. Cash and total production costs are expected to rise by about 14% to $185 per ounce and 12% to $225 per ounce, respectively, compared with 2004, due to lower production. At the Bald Mountain mine, production in the fourth quarter of 2004 was 11,102 ounces, 34% lower than 2003. Cash costs were $426 per ounce, 127% above 2003 due to mining a higher level of waste, combined with lower gold production due to lower than expected secondary recoveries from older leach piles due to a loss of alkalinity. Activities at the site during 2004 were focused on pre-stripping and waste removal of Stage 7 of Bald Mountain's Top Pit to facilitate sustained ore production beginning in the third quarter of 2005. Production at Stage 7 is scheduled to ramp up during 2005 and is expected to continue until the first quarter of 2007 with the heap leach pads expected to produce gold until 2009. As a result, gold production in 2005 is expected to be 93% higher than in 2004 due to full development of the orebody where higher grades and lower strip ratios exist. Production at Golden Sunlight was nil in the fourth quarter of 2004, down from 53,812 ounces in 2003. Mining from the open pit and the underground mines ceased in August and December 2003, respectively. Production from Golden Sunlight was suspended in December 2003 and operations recommenced in January, 2005 when ore was delivered to the mill from Stages 5B and 2B. Production in 2005 is expected to be 90,000 ounces, at a cash cost per ounce of $265. Placer Dome's share of production from Turquoise Ridge in fourth quarter of 2004, at 38,863 ounces was similar to the comparative 2003 period. Cash costs were $406 per ounce, 104% above 2003 levels, due to lower grades and increased labour training and start-up costs. Placer Dome's 75% share of annual gold production from the Turquoise Ridge and Getchell mines in 2005 is expected to be 150,000 ounces. Placer Dome's share of cash and total costs per ounce for the production of ore is $280 and $300, respectively. These unit costs do not include the cost of processing the ore. Construction work at Turquoise Ridge was completed during the quarter. Ongoing development work continued during 2004 and is expected to be complete in 2005 with operations expected to reach annualized production of 300,000 ounces (Placer Dome's share 225,000 ounces) of gold in 2006. Australia and Papua New Guinea At the Porgera mine, Placer Dome's share of production in the fourth quarter of 2004, at 204,110 ounces, was 18% above 2003 primarily due to higher throughput, reflecting the installation of the secondary crusher, higher grades and recoveries. Cash costs per ounce were $200 or 25% lower than the prior year, as increased production more than offset strengthening currencies. In 2005, Placer Dome's share of gold production is expected to be 720,000 ounces, a 6% decrease over 2004. The production in the first half of 2005, sourced from Stage 4, is expected to be marginally higher than the comparative 2004 period, however the second half of 2005 will be sourced from Stage 5, which has harder ore and lower grades, resulting in 14% lower production than in the first half of the year. Unit cash costs are expected to increase by approximately 33% in 2005 from 2004 due to lower production levels, increased operating costs, and the continued weakness of the U.S. dollar. At the Granny Smith mine, production in fourth quarter of 2004, at 93,030 ounces, was 19% above that of the prior-year period due to the processing of softer ore from Stage 3. Cash costs per ounce were $399, a 48% increase over the prior-year period due to the appreciation of the Australian dollar against the U.S. dollar, higher diesel prices, and increased maintenance and stripping costs. The Wallaby underground feasibility study and related underground development continued during 2004. The study is scheduled for completion in the second quarter of 2005, with the primary goal of delineating the Zone 60/250 ore body and justifying its exploitation via an underground mining operation. Delineation drilling has been conducted from surface within the Wallaby open pit and from an underground drill drive developed as part of the feasibility study. The study also includes trial underground mining in three lenses in the upper areas of the proposed underground mine. This trial is expected to result in the production of approximately 46,000 ounces during the feasibility study period, resulting in the study having a net cost of approximately $6 million. In 2005, annual production is expected to be around 325,000 ounces, a 22% increase from 2004 due primarily to higher open pit grades and minimal milling of low grade stockpiles. Unit cash costs are expected to decrease by approximately 12% in 2005 due to higher production, partially offset by higher costs and the continued strength of the Australian dollar against the U.S. dollar. Production from Kalgoorlie West in the fourth quarter of 2004, at 55,726 ounces, was down 47% from 2003 due the closure of the mill at Kundana in the first quarter of 2004 and the completion of open pit operations at certain other deposits in December 2003. Cash and total costs per ounce were $402 and $533, respectively, a 45% and 48% increase from 2003 due to mining higher-cost ore bodies than 2003, the use of low-grade ore to supplement mill feed, and the continued strength of the Australian dollar against the U.S. dollar. The development of the Raleigh underground mine commenced in July. The underground mine will be an extension of the Raleigh open pit mine with production scheduled to commence in late 2005 and continue through 2011. The Raleigh mine is located partially on a mining lease owned 100% by Placer Dome and partially on a mining lease owned by a joint venture in which Placer Dome has a 51% interest. Placer Dome's share of the capital cost is estimated at $17 million, with the majority of this expenditure in 2005. Placer Dome's share of production over the six-year mine life is expected to be approximately 250,000 ounces. In 2005, production is expected to be about 250,000 ounces, a decrease of 5% from 2004. Unit cash costs are expected to be $350 per ounce, 4% higher than 2004 due to lower production levels. At the Kanowna Belle mine production for the fourth quarter of 2004 was 65,870 ounces, 13% below 2003 due to delays in processing, caused by the high sulphur content of the ore. Cash and total costs per ounce were $257 and $308, respectively, a 23% and 5% increase from 2003 due to lower production and the appreciation of the Australian dollar against the U.S. dollar. In 2005, annual production is expected to be about 245,000 ounces, an increase of 3% over 2004. Unit cash costs are expected to increase by approximately 10%, to $280 per ounce due to higher operating costs and the continued strength of the Australian dollar against the U.S. dollar. At the Osborne mine, copper and gold production in the fourth quarter of 2004 were 17.9 million pounds (8,134 tonnes) and 7,579 ounces, respectively, a decrease of 30% and an increase of 37% from 2003 levels due to lower throughput, grades and recovery for copper and gold due to delays in accessing mining areas in the first part of the quarter. Cash and total costs per pound of copper (Osborne produces copper concentrate with gold as a by-product) were $0.98 and $1.23, respectively, a 75% and 86% increase, respectively, from 2003 due to lower production levels, increased development work, higher shipping and fuel costs, updates of the mine closure reclamation estimate and the appreciation of the Australian dollar against the U.S. dollar. Copper and gold production for 2005 are expected to decrease 8% and 4%, respectively, from 2004 levels. Cash and total costs per pound are expected to increase 32% and 24%, respectively, to $0.91 and $1.04, respectively, due to lower production, higher smelting and refining charges, increased mine development costs and the continued strength of the Australian dollar against the U.S. dollar. South Africa and Tanzania At the South Deep mine, Placer Dome's share of production for the fourth quarter of 2004 was 59,757 ounces, 10% above 2003, including the recovery of approximately 6,500 ounces from the clean up of the milling facility that was closed in 2002. Unit cash and total production costs increased by 5% and 6%, respectively, to $384 and $429, respectively, due to primarily to a 27% appreciation in the average exchange rate of the rand for the U.S. dollar, partially offset by the inclusion of the ounces recovered from the plant clean up. Work on the South Deep Twin Shaft project was completed and commissioning of the shafts commenced during the fourth quarter. The new shaft complex provides for quicker access of personnel and logistic supplies to the centre of mining operations. The rock-hoisting facility now provides direct delivery of ore from 2.76 kilometres underground into the metallurgical plant located adjacent to the shaft complex on surface. The mine is now focused on the commissioning of the Ventilation/Refrigeration system down the new Ventilation shaft. Direct cooling into workplaces will have a better cooling effect on underground conditions relative to the old system. Accelerated development rates can now be achieved on the 90 and 94 levels. In 2005, Placer Dome's share of annual gold production is expected to be approximately 230,000 ounces, a 7% increase over 2004 due to higher throughput and grades. Unit cash costs are expected to decrease by approximately 11% to $350 per ounce in 2005 from 2004 due to higher production levels, the weakening of the rand relative to the U.S. dollar and a reduced work force. Early in 2004, South Deep restructured and reduced management. In the fourth quarter, as part of its ongoing efforts to improve mine costs structure, the South Deep mine completed a restructuring which reduced the work force by approximately 350 people. At the North Mara mine, production was 63,027 ounces, a 20% increase over 2003 due to higher grades, and throughput, partially offset by lower recovery. Cash costs, at $218 per ounce were 5% below the prior-year's period due to higher production. An expansion of the mine's nominal mill throughput from approximately 2.0 million to 2.8 million tonnes per annum was completed in the fourth quarter. This is expected to increase estimated annual production to between 280,000 and 300,000 ounces. During the fourth quarter, Placer Dome also took over mining operations from the existing mining contractor at a cost of $16 million, including purchasing its mobile equipment fleet. Owner mining is expected to reduce cost per tonne mined over the life of mine and provide better control over the mining operation. Stage 1 of the Nyabirama pit will be concluded in the second quarter of 2005. It is planned that this will be followed with the Gokona Stage 1 development, with site preparation now under way. Gold production in 2005 is expected to be approximately 290,000 ounces, 39% above 2004 due to the mining operations moving into the higher grade Gokona pit where ore should be exposed in the fourth quarter, increased mining capacity through the purchase of additional mining equipment, and increased mill throughput. Cash costs per ounce at $230 are expected to be in line with 2004; however, total costs per ounce are expected to increase to $320 due to additional depreciation related to the plant upgrade, the purchase of the mining fleet and the startup of the Gokona pit. Chile At the Zaldivar mine, fourth quarter 2004 production was 75.5 million pounds, (34,222 tonnes) of copper, 12% below the 2003 period due to mining of a lower-grade area and high sulphide copper content impacting recovery. Cash and total cost per pound were $0.56 and $0.72 respectively, 8% and 7% above the comparative 2003 periods due to lower production. In 2005, annual production is targeted at 332 million pounds (150,500 tonnes) as the recovery issue mentioned above reverses, with cash costs increasing to $0.55 per pound, reflecting higher acid, fuel, labor and parts costs. Financial Condition, Liquidity and Capital Resources At December 31, 2004, Placer Dome had cash and short-term investments of $1,031 million and working capital of $1,183 million, compared with $559 million and $704 million, respectively, at the beginning of the year. In addition to cash and short-term investments, Placer Dome had $122 million of restricted cash, primarily related to the North Mara demand loan, which requires cash to be placed on deposit with the lender in an amount equal to drawdowns. The increase in working capital was primarily attributable to financing activities including $492 million in common shares, of which $452 million related to an equity offering of 21,275,000 common shares at $22.00 in the fourth quarter of 2004. Of Placer Dome's cash and short-term investments, $1,017 million was held by the Corporation and its wholly owned subsidiaries and $14 million by other subsidiaries. At December 31, 2004, Placer Dome also had $895 million of undrawn bank lines of credit available, $46 million of which has been utilized to support letters of credit granted for bonding and reclamation purposes. Total funds invested in property, plant and equipment, excluding deferred stripping, over the last two years are detailed below. ----------------- 2004 2003 $ $ ------------------------------------------------------------------------- South Deep development 53 63 North Mara plant upgrade and equipment buyout 39 - Golden Sunlight pre-stripping 30 - Turquoise Ridge / Getchell development 29 22 Integrated business system 22 - Porcupine Pamour Pit 18 - Zaldivar processing enhancements and development 17 23 Cortez mobile equipment 14 - Granny Smith tenements 9 - Wallaby development 7 2 Cortez heap leach pad expansion 7 - Kalgoorlie West development and equipment enhancement 7 18 Campbell DC zone development 4 9 Other 84 76 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 340 213 ------------------------------------------------------------------------- Development at South Deep primarily related to the main shaft, which was completed in late 2004, and underground development. In 2003, investing activities included a net $253 million ($255 million purchase price, offset by $2 million in cash in East African Gold upon acquisition) for the purchase of East African Gold Limited, which owns the North Mara mine in Tanzania. Consolidated short and long-term debt balances at December 31, 2004, were $1,267 million, compared with $1,189 million at December 31, 2003. Significant financing activities include: ----------------- 2004 2003 Cash (outflow) inflow from financing activity $ $ ------------------------------------------------------------------------- Preferred Securities, 8.625% due in 2045 - (185) Unsecured bonds, 7.125% due in 2003 - (200) Non-recourse debt (assumed in East African Gold acquisition in 2003) (36) - Unsecured debt (assumed in AurionGold acquisition in 2002) - (139) Dividends (41) (44) Common shares (net of issue costs) 492 31 Restricted cash (110) - North Mara demand loan 110 - Unsecured bonds, 6.375% due in 2033 - 200 Unsecured bonds, 6.45% due in 2035 - 300 Senior convertible debentures, 2.75% due in 2023 - 230 Issue costs re Unsecured bond and Senior convertible debenture financings - (15) Other 4 (11) ------------------------------------------------------------------------- ------------------------------------------------------------------------- 419 167 ------------------------------------------------------------------------- At December 31, 2004, Placer Dome was in compliance with all debt covenants and default provisions. Forward Sales, Options and Other Commitments Placer Dome enters into financial agreements with major international banks and other international financial institutions in order to manage underlying revenue and cost exposures arising from fluctuations in commodity prices and foreign currency exchange rates. Contracts include forward sales and options, which, with the exception of call options, commit counterparties to prices payable at a future date. There are no margin call provisions in any of the Corporation's counterparty agreements. Specific limits are set as a declining percentage of planned production (or production costs) in each of the next 15 years. These limits are set out in policies approved by the Board of Directors and reviewed not less than annually. Under its programs, Placer Dome has established the minimum prices it expects to receive (or pay) in the future for a portion of metal sales (and foreign currency production costs), through a combination of forward sales contracts and options. Under the metal sales program, forward sale and call and cap option commitments represent approximately 39% and 32%, and put options represent approximately 19% and 24% of 2005 projected gold and copper production, respectively. Approximately two-thirds of the company's copper hedge positions are due in the first half of 2005. Precious Metals During 2004, Placer Dome reduced the maximum committed ounces under its precious metal sales program by 1.5 million ounces to 9.0 million. Committed ounces were reduced during the year by delivering into hedge contracts and through early delivery of forward sales. This represents a cumulative decrease in maximum committed ounces of more than 14% for the year. Looking forward, Placer Dome expects to reduce its maximum committed ounces to 7.5 million ounces by December 31, 2005. This would represent a cumulative decrease in maximum committed ounces of approximately 16% for the year. At December 31, 2004, Placer Dome had committed a maximum of 9.0 million ounces of gold under its precious metal sales program, or approximately 15% of reported December 31, 2004 mineral reserves, at an average expected realized price of approximately $392 per ounce for delivery over a period of 12 years. On December 31, 2004, based on spot prices of $438 per ounce for gold, $6.80 per ounce for silver and an Australian to U.S. dollar ("AUD/USD") exchange rate of $1.2814, the mark-to-market value of Placer Dome's precious metal sales program was negative $775 million, a change of $70 million from the negative $705 million at the end of 2003 (at the then spot prices of $417 per ounce for gold and $5.98 per ounce for silver and an AUD/USD exchange rate of $1.3319). The amount reflects the value that would have been paid to counterparties if the contracts were closed out on December 31, 2004 under prevailing market conditions without allowance for market illiquidity. The year-over-year change in the mark-to-market value of Placer Dome's precious metals sales program and the reconciliation to the unrealized mark-to-market value are detailed as follows: ----------- $ million ------------------------------------------------------------------------- Mark-to-market value at December 31, 2003 (705) Cash value cost 89 Change in spot price (169) Accrued contango 142 Change in the Australian dollar to U.S. dollar exchange rate, volatility, interest rates and gold lease rates (132) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Mark-to-market value at December 31, 2004 (775) Provision included in Deferred Commodity and Currency Derivatives liability relating primarily to the value of the AurionGold and the East African Gold precious metal hedge books remaining from the acquisitions by Placer Dome 163 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net unrealized mark-to-market value at December 31, 2004 (612) ------------------------------------------------------------------------- The net unrealized mark-to-market value of negative $612 million reflects the income statement effect Placer Dome would expect to incur had it closed out its contracts on December 31, 2004 under metal price, foreign exchange rates, interest rates and volatilities prevailing at that time. This amount is the mark-to-market balance of negative $775 million less the remaining amount of the deferred commodity derivative provision of $163 million recorded on Placer Dome's balance sheet at December 31, 2004 primarily related to the fair value of the AurionGold and East African Gold precious metal hedge books on the dates that Placer Dome acquired control of those companies. The mark-to-market and unrealized mark-to-market amounts are not estimates of future gains or losses which depend on various factors including contango and interest rates, gold lease rates and the then prevailing spot price. For the copper sales and currency derivative programs, the mark-to-market of forward and option contracts on December 31, 2004, was negative $38 million (based on a spot copper price of $1.488 per pound) and positive $51 million (based on an AUD/USD foreign exchange rate of 1.2814 and a Canadian to U.S. dollar foreign exchange rate of 1.2036), respectively. Sensitivities The sensitivity of annual net earnings to key metal price changes based on metal prices of $400 per ounce for gold and $1.20 per pound for copper and projected 2005 sales volumes is estimated as follows: ----------------------------------------- Change in 2005 net earnings ----------------------------------------- Increase in price Decrease in price -------------------------------------------------------- Price change Per share Per share ($) $millions ($) $millions ($) ------------------------------------------------------------------------- Gold 25.00/oz 46 0.10 (44) (0.10) Copper 0.05/lb 11 0.03 (13) (0.03) ------------------------------------------------------------------------- The sensitivity of annual net earnings to foreign exchange fluctuations with respect to mine operating costs and non-hedge derivatives of the Australian dollar, the Canadian dollar, the Chilean peso, the Papua New Guinean kina and the South African rand to the U.S. dollar for projected 2005 sales volumes is estimated as follows: ----------------------------------------- Change in 2005 net earnings -------------------------------------------------------- Local currencies Local currencies appreciate by 10% depreciate by 10% Rate ----------------------------------------- December 31, Per share Per share 2004 $millions ($) $millions ($) ------------------------------------------------------------------------- Australian dollar 1.2847 (10) (0.02) 14 0.03 Canadian dollar 1.2037 (3) (0.01) 7 0.02 Chilean peso 556 (6) (0.02) 6 0.02 Papua New Guinean kina 3.05 (3) (0.01) 3 0.01 South African rand 5.66 (8) (0.02) 8 0.02 ------------------------------------------------------------------------- FIRST AND FINAL ADD TO FOLLOW DATASOURCE: Placer Dome Inc. CONTACT: on this news release please contact Investor Relations: Greg Martin, (604) 661-3795 or Meghan Brown, (604) 661-1577; Media Relations: Gayle Stewart, (604) 661-1911; Toll-free within North America, (800) 565-5815; For enquiries related to shares, transfers and dividends please contact CIBC Mellon Trust Company, Toll-free within North America, (800) 387-0825, Collect calls accepted from outside North America, (416) 643-5500; Head Office: Suite 1600, Bentall IV, 1055 Dunsmuir Street, P.O. Box 49330, Bentall Postal Station, Vancouver, British Columbia, Canada, V7X 1P1, tel (604) 682-7082, fax (604) 682-7092; On the internet: http://www.placerdome.com/

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