/FIRST AND FINAL ADD - TO056 - Placer Dome Inc. Earnings/ (United
States ("U.S.") dollars, in accordance with U.S. generally accepted
accounting principles ("GAAP")) PLACER DOME INC. CONSOLIDATED
STATEMENTS OF EARNINGS (millions of U.S. dollars, except share and
per share amounts, U.S. GAAP) (unaudited) ----------------- For the
three months ended March 31 ----------------- 2005 2004 $ $
-------------------------------------------------------------------------
Sales (note 4) 491 508 Cost of sales 319 287 Depreciation and
depletion 68 63
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Mine operating earnings (note 4(b)) 104 158
-------------------------------------------------------------------------
General and administrative 17 15 Exploration 18 16 Resource
development, technology and other 14 14
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating earnings 55 113
-------------------------------------------------------------------------
Non-hedge derivative loss (1) (7) Investment and other business
income 22 2 Interest and financing expense (23) (19)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings before taxes and other items 53 89
-------------------------------------------------------------------------
Income and resource tax provision (13) (32) Equity in earnings of
associates 5 3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings before the cumulative effect of changes in accounting
policies 45 60
-------------------------------------------------------------------------
Changes in accounting policies (note 2) (14) 4
-------------------------------------------------------------------------
Net earnings 31 64
-------------------------------------------------------------------------
Comprehensive income 37 36
-------------------------------------------------------------------------
Per common share Net earnings (and diluted net earnings) before the
cumulative effect of changes in accounting policies 0.10 0.15 Net
earnings 0.07 0.16 Diluted net earnings 0.07 0.15 Dividends 0.05
0.05
-------------------------------------------------------------------------
Weighted average number of common shares (millions) Basic 436.4
412.1 Diluted 450.3 416.8
-------------------------------------------------------------------------
(See accompanying notes to the unaudited interim consolidated
financial statements) PLACER DOME INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS (millions of U.S. dollars, U.S. GAAP) (unaudited)
----------------- For the three months ended March 31
----------------- 2005 2004 $ $
-------------------------------------------------------------------------
Operating activities Net earnings 31 64 Add (deduct) non-cash items
Depreciation and depletion 68 63 Deferred stripping adjustment (10)
(9) Unrealized loss on derivatives - 5 Deferred reclamation 5 3
Deferred income and resource taxes (4) 10 Changes in accounting
policies (note 2) 14 (4) Other items, net (5) 5
-------------------------------------------------------------------------
Cash from operations before change in non-cash working capital 99
137 Change in non-cash operating working capital (31) (3)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash from operations 68 134
-------------------------------------------------------------------------
Investing activities Property, plant and equipment (57) (69)
Short-term investments (1) (1) Other, net (1) 3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(59) (67)
-------------------------------------------------------------------------
Financing activities Short-term debt 7 - Restricted cash (11) -
Long-term debt and capital leases financing Borrowings - 5
Repayments (1) (4) Common shares issued 1 15
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(4) 16
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Increase in cash and cash equivalents 5 83
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents Beginning of period 1,017 550
-------------------------------------------------------------------------
-------------------------------------------------------------------------
End of period 1,022 633
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(See accompanying notes to the unaudited interim consolidated
financial statements) PLACER DOME INC. CONSOLIDATED BALANCE SHEETS
(millions of U.S. dollars, U.S. GAAP) (unaudited) ASSETS
----------------- March December 31 31 2005 2004 $ $
-------------------------------------------------------------------------
Current assets Cash and cash equivalents 1,022 1,017 Short-term
investments 15 14 Restricted cash 133 122 Accounts receivable 142
138 Income and resource tax assets 95 97 Inventories (note 5) 244
248
-------------------------------------------------------------------------
-------------------------------------------------------------------------
1,651 1,636
-------------------------------------------------------------------------
Investments 56 50 Other assets (note 6) 176 173 Deferred commodity
and currency sales contracts and derivatives 49 54 Income and
resource tax assets 418 400 Deferred stripping 180 170 Goodwill 454
454 Property, plant and equipment Cost 4,853 4,791 Accumulated
depreciation and depletion (2,260) (2,184)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2,593 2,607
-------------------------------------------------------------------------
5,577 5,544
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY ----------------- March
December 31 31 2005 2004 $ $
-------------------------------------------------------------------------
Current liabilities Accounts payable and accrued liabilities 265
268 Income and resource taxes liabilities 25 27 Short-term debt 120
113 Current portion of long-term debt and capital leases 45 45
-------------------------------------------------------------------------
-------------------------------------------------------------------------
455 453
-------------------------------------------------------------------------
Long-term debt and capital leases 1,108 1,109 Reclamation and post
closure obligations 274 251 Income and resource tax liabilities 274
265 Deferred commodity and currency sales contracts and derivatives
214 223 Deferred credits and other liabilities 72 79 Commitments
and contingencies (notes 7 and 8) Shareholders' equity 3,180 3,164
-------------------------------------------------------------------------
-------------------------------------------------------------------------
5,577 5,544
-------------------------------------------------------------------------
(See accompanying notes to the unaudited interim consolidated
financial statements) PLACER DOME INC. CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY (millions of U.S. dollars, except share
amounts, U.S. GAAP) (unaudited) ----------------- For the three
months ended March 31 ----------------- 2005 2004 $ $
-------------------------------------------------------------------------
Common shares(i), beginning of period 2,522 2,023 Exercise of
options 1 15
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares, end of period 2,523 2,038
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss, beginning of period (15) (35)
Unrealized gain on securities 4 1 Unrealized gain (loss) on
derivatives Copper (6) (30) Currency - 4 Reclassification of (gain)
loss on derivatives included in net earnings Copper 11 1 Currency
(3) (4)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss, end of period (9) (63)
-------------------------------------------------------------------------
Contributed surplus, beginning of period 69 66 Stock-based
compensation - 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus, end of period 69 67
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, beginning of period 588 345 Net earnings 31 64
Common share dividends (22) (21)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, end of period 597 388
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity 3,180 2,430
-------------------------------------------------------------------------
(i) Authorized and issued share capital: Preferred shares -
unlimited shares authorized, no par value, none issued. Common
shares - unlimited shares authorized, no par value, issued and
outstanding at March 31, 2005 - 436,494,540 shares (December 31,
2004 - 436,395,449 shares). (see accompanying notes to the
unaudited interim consolidated financial statements) PLACER DOME
INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (all
tabular amounts are in millions of U.S. dollars, U.S. GAAP) 1.
Basis of Presentation The accompanying unaudited interim
consolidated financial statements have been prepared in accordance
with U.S. generally accepted accounting principles ("GAAP"). They
do not include all of the disclosures required by GAAP for annual
financial statements. In the opinion of management, the adjustments
considered necessary for fair presentation, all of which are of a
normal and recurring nature, have been included in these financial
statements. Operating results for the three months ended March 31,
2005 are not necessarily indicative of the results that may be
expected for the full year ending December 31, 2005 or future
operating periods. For further information, see Placer Dome's
consolidated financial statements, including the accounting
policies and notes thereto, included in the Annual Report and
Annual Information Form/Form 40-F for the year ended December 31,
2004. Pursuant to an exemption order obtained from Canadian
securities regulatory authorities in July 2003, Placer Dome was
permitted to file its annual and quarterly consolidated financial
statements prepared in US GAAP rather than Canadian GAAP provided
that, among other things, the notes to the first two sets of annual
financial statements filed after the date of the order and the
notes to the interim financial statements filed during such period
include a reconciliation highlighting the material differences
between such financial statements prepared in accordance with US
GAAP as compared to the financial statements being prepared in
Canadian GAAP, as well as a management's discussion and analysis
focusing on these differences. In accordance with the terms of the
order, Placer Dome is no longer required to include the
reconciliation in the notes to its interim financial statements.
Pursuant to the Regulations under the Canada Business Corporations
Act, Placer Dome will be required to include the reconciliation
between US GAAP and Canadian GAAP described above in the notes to
its annual financial statements for the financial year ended
December 31, 2005. After such date, Placer Dome will no longer be
required to include this reconciliation in the notes to its annual
financial statements. On March 30, 2005, the Financial Accounting
Standards Board ("FASB") ratified the consensus of the Emerging
Issues Task Force ("EITF") of the FASB Issue 04-6 that stripping
costs incurred during the production phase of a mine are variable
production costs that should be included in the costs of the
inventory produced during the period that the stripping costs are
incurred. This consensus is effective for the first reporting
period in fiscal years beginning after December 15, 2005, with
early adoption permitted. The consensus can be adopted either
prospectively through a cumulative-effect adjustment or
retrospectively by restating prior period financial statements.
Placer Dome currently capitalizes stripping costs incurred during
the production phase of a mine to the deferred stripping account.
Amortization, which is calculated using the units of production
method based on recovered ounces of gold or pounds of copper, is
charged to cost of sales as gold or copper is produced and sold,
using a stripping ratio calculated as the ratio of total tonnes of
rock to be moved to total ounces of gold or total pounds of copper
expected to be recovered over the life of open pits. This policy
results in the expensing of stripping costs over the lives of the
open pits as gold or copper is produced and sold. At March 31,
2005, Placer Dome's deferred stripping amount on its unaudited
interim consolidated balance sheet was $180 million. In addition to
this, smaller deferred stripping balances were present in various
product inventory accounts such as metal in circuit and ore
stockpiles. Placer Dome is currently evaluating the impact of this
consensus. On April 15, 2005, the U.S. Securities and Exchange
Commission ("SEC") announced that it would provide for a phased-in
implementation process for FASB Statement No. 123(R), Share-Based
Payment ("SFAS 123(R)"). The SEC would require that registrants
adopt SFAS 123(R)'s fair value method of accounting for share-based
payments to employees no later than the beginning of the first
fiscal year beginning after June 15, 2005. Placer Dome now plans to
adopt SFAS 123(R) effective January 1, 2006. Certain amounts for
2004 have been reclassified to conform with the current period's
presentation. 2. Changes in Accounting Policies Effective January
1, 2005, Placer Dome changed its accounting policy with respect to
termination obligations, whereby the liability accrued will
represent the obligation to date for all employees at mine sites.
The amount of the liability is subject to re-measurement at each
reporting period. This differs from the current practice, which
involves accruing for the estimated termination costs through
annual charges to earnings over the estimated life of the mine. The
cumulative effect of the change in policy on the balance sheet at
January 1, 2005 was to increase Deferred credits and other
liabilities by $21 million with a one time after-tax charge to net
earnings of $14 million ($0.03 per share). 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.
Previously, Placer Dome had, at December 31, 2003, a liability in
deferred stripping relating to its share of the Cortez joint
venture on Placer Dome's consolidated balance sheet. This change
was made as a result of deliberations by the EITF at its July 1,
2004 meeting which concluded that a deferred stripping liability
did not meet the definition of a liability under FASB Concept
Statement No. 6. 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. Business Acquisition On July
23, 2003, the Corporation completed the acquisition of 100% of the
shares of East African Gold Mines Limited ("East African Gold").
The purchase price for the acquisition totalled $255 million,
comprised of $252 million in cash and approximately $3 million in
direct costs incurred by Placer Dome. In addition to this $3
million, East African Gold accrued in its pre acquisition results
charges relating to the transaction totalling approximately $7
million. A portion of the purchase price was paid from cash and
short term investments with the majority of the purchase price
initially being financed. In addition to this consideration, the
acquisition included East African Gold's loan for project financing
of $43 million at the date of acquisition. The transaction provides
Placer Dome with the North Mara open pit gold mine in Northern
Tanzania and surrounding land packages. The results of operations
of East African Gold have been included in the accompanying
financial statements since July 23, 2003. The acquisition was
accounted for using the purchase method whereby assets acquired and
liabilities assumed were recorded at their fair market values as of
the date of acquisition. The excess of the purchase price over such
fair value was recorded as goodwill. During the second quarter of
2004, Placer Dome finalized the purchase price equation. Net
earnings for the first quarter of 2004 were not restated as the
effect on the post acquisition period was not material. 4. Business
Segments Substantially all of Placer Dome's operations are within
the mining sector. Due to the geographic and political diversity,
Placer Dome's mining operations are decentralized whereby Mine
General Managers are responsible for achieving specific business
results within a framework of global policies and standards.
Country corporate offices provide support infrastructure to the
mines in addressing local and country issues including financial,
human resource and exploration support. Major products are gold and
copper produced from mines located in Canada, the U.S., Australia,
Papua New Guinea, South Africa, Tanzania and Chile. (a) Product
segments Sales by metal segment ----------------- For the three
months ended March 31 ----------------- 2005 2004 $ $
-----------------------------------------------------------------
Gold 365 361 Copper 124 145 Other 2 2
-----------------------------------------------------------------
-----------------------------------------------------------------
491 508
-----------------------------------------------------------------
(b) Segment sales revenue and mine operating earnings (loss)
----------------------------------- Mine Operating Sales Earnings
----------------------------------- For the three months ended
March 31 ----------------------------------- 2005 2004 2005 2004 $
$ $ $
-----------------------------------------------------------------
Canada Campbell 22 21 3 1 Musselwhite 19 15 2 2 Porcupine 22 22 6 6
-----------------------------------------------------------------
-----------------------------------------------------------------
63 58 11 9
-----------------------------------------------------------------
United States Bald Mountain 6 5 (1) 2 Cortez 57 61 28 31 Golden
Sunlight(i) 4 2 (1) 1 Turquoise Ridge 12 15 (2) 4
-----------------------------------------------------------------
-----------------------------------------------------------------
79 83 24 38
-----------------------------------------------------------------
Australia Granny Smith 39 21 (7) (4) Henty 14 12 4 3 Kalgoorlie
West 23 38 (3) 7 Kanowna Belle 23 25 (3) 5 Osborne 27 34 3 10
-----------------------------------------------------------------
-----------------------------------------------------------------
126 130 (6) 21
-----------------------------------------------------------------
Papua New Guinea Misima(ii) - 13 - 3 Porgera 80 78 33 36
-----------------------------------------------------------------
-----------------------------------------------------------------
80 91 33 39
-----------------------------------------------------------------
South Africa South Deep 19 18 (6) (3)
-----------------------------------------------------------------
-----------------------------------------------------------------
Tanzania North Mara 31 21 6 6
-----------------------------------------------------------------
Chile Zaldivar 120 125 68 65
-----------------------------------------------------------------
-----------------------------------------------------------------
Metal hedging loss (27) (18) (27) (18) Currency hedging gain - - 5
5 Amortization of tax gross up(iii) - - (4) (2) Stock-based
compensation - - 1 (1) Other - - (1) (1)
-----------------------------------------------------------------
-----------------------------------------------------------------
491 508 104 158
-----------------------------------------------------------------
(i) Production from Golden Sunlight was temporarily suspended in
December 2003 and recommenced when ore was delivered from Stage 2B
in January 2005. (ii) Processing of ore ceased at Misima in May
2004. (iii) 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 assets and liabilities
for the tax effect of such differences. The amortization of these
amounts includes $1 million (2004 -$1 million) for Porgera, $1
million (2004 - $1 million) for North Mara, $1 million (2004 - nil)
for Kalgoorlie West, and $1 million (2004 - nil) for Henty. 5.
Inventories Inventories comprise the following: -----------------
March December 31, 31, 2005 2004 $ $
---------------------------------------------------------------------
Metal in circuit 95 102 Ore stockpiles 105 103 Materials and
supplies 87 83 Product inventories 31 31
---------------------------------------------------------------------
---------------------------------------------------------------------
318 319 Long-term portion of ore stockpiles (74) (71)
---------------------------------------------------------------------
---------------------------------------------------------------------
Inventories 244 248
---------------------------------------------------------------------
6. Other Assets Other assets consist of the following:
----------------- March December 31, 31, 2005 2004 $ $
---------------------------------------------------------------------
Sale agreement receivable(i) 68 66 Long-term ore stockpiles (note
5) 74 71 Debt issue costs and discounts 17 17 Pension asset 15 15
Other 11 13
---------------------------------------------------------------------
---------------------------------------------------------------------
185 182 Current portion of other assets (9) (9)
---------------------------------------------------------------------
---------------------------------------------------------------------
176 173
---------------------------------------------------------------------
(i) In December 2000, Compania Minera Zaldivar completed the sale
of some of its water rights for a sum of $135 million, receivable
in fifteen equal annual installments of $9 million commencing July
1, 2001. On a discounted basis, this resulted in a pre-tax gain of
$76 million and a corresponding receivable being recorded in 2000.
Imputed interest on the receivable is being accrued monthly. 7.
Consolidated Metals Sales and Currency Programs At March 31, 2005,
based on the spot prices of $427.50 per ounce for gold, $7.18 per
ounce for silver and $1.546 per pound for copper, an Australian to
U.S. dollar ("AUD/USD") exchange rate of $1.2937, the
mark-to-market values of Placer Dome's precious metal and copper
sales programs were negative $698 million and negative $28 million,
respectively. The precious metal mark-to-market does not take into
the account the $160 million liability in Deferred commodity and
currency sales contracts and derivatives as at March 31, 2005
primarily representing the remaining provision booked on
acquisition for the fair value of the AurionGold and East African
Gold metal hedge books. For the currency program, the
mark-to-market value of Placer Dome's currency forward and option
contracts on March 31, 2005, was approximately positive $44 million
(based on an AUD/USD foreign exchange rate of $1.2937 and a
Canadian to U.S. dollar foreign exchange rate of $1.2096), all of
which has been recognized through earnings or other comprehensive
income. Gains and losses on Placer Dome's gold and silver forward
contracts and cap agreements are recognized in sales revenue on the
initial intended delivery date, except in instances where Placer
Dome chooses to deliver prior to that date, in which case they are
recognized on delivery. Placer Dome's copper forward contracts are
accounted for as cash flow hedges with the change in fair values
recorded each period in other comprehensive income and subsequently
reclassified to sales revenue on the contract forward date. Changes
in the fair values of all other metals financial instruments are
recorded each period in earnings in the non-hedge derivative gain
(loss) line. At March 31, 2005, Placer Dome's consolidated metal
sales program consisted of:
------------------------------------------------------- 2005 2006
2007 2008 2009 2010 2011+ Total
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Gold (000's ounces):
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Forward contracts sold(i) Fixed contracts Amount 888 1,239 1,260
1,013 347 246 461 5,454 Average price ($/oz.) 341 344 373 394 411
410 474 378 Fixed interest floating lease rate Amount - - - 197 772
285 625 1,879 Average price ($/oz.) - - - 356 430 420 485 439 A$
forward contracts Amount - 11 21 - - - - 32 Average price ($/oz.) -
475 489 - - - - 484
-------------------------------------------------------------------------
Total 888 1,250 1,281 1,210 1,119 531 1,086 7,365 Forward contracts
sold A$ forward contracts purchased (75) - - - - - - (75)
-------------------------------------------------------------------------
Total Forward contracts 813 1,250 1,281 1,210 1,119 531 1,086 7,290
-------------------------------------------------------------------------
Call options sold and cap agreements(ii) Amount 258 219 115 200 20
40 20 872 Average price ($/oz.) 360 357 363 394 500 500 500 380 A$
contracts Amount 38 - - - - - - 38 Average price ($/oz.) 388 - - -
- - - 388
-------------------------------------------------------------------------
Total Call option sold and cap agreements 296 219 115 200 20 40 20
910
-------------------------------------------------------------------------
Total Firm committed ounces(iii) 1,109 1,469 1,396 1,410 1,139 571
1,106 8,200
-------------------------------------------------------------------------
Contingent call options sold(iv) Knock-in (up and in) Amount 81 52
- - - - 64 197 Average price ($/oz.) 394 387 - - - - 362 382
Average barrier level ($/oz.) 432 425 - - - - 425 428 Knock out
(down and out) Amount 38 37 64 52 115 29 - 335 Average price
($/oz.) 411 429 439 453 431 476 - 437 Average barrier level ($/oz.)
360 395 383 370 380 387 - 379
-------------------------------------------------------------------------
Total Maximum committed ounces(v) 1,228 1,558 1,460 1,462 1,254 600
1,170 8,732
-------------------------------------------------------------------------
Put options purchased(vi) Amount 542 546 362 179 159 103 99 1,990
Average price ($/oz.) 408 416 440 405 397 432 416 417
-------------------------------------------------------------------------
Put options sold(vii) Amount 60 80 - - - - - 140 Average price
($oz.) 250 250 - - - - - 250
-------------------------------------------------------------------------
Contingent call options purchased not included in the above table
total 53,000 ounces at an average price of $435 per ounce.
----------------------------------------- 2005 2006 2007 2008 2009
Total
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Silver (000's ounces):
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Fixed forward contracts(i) Amount - 1,200 - - - 1,200 Average price
($/oz) - 6.25 - - - 6.25 Call options sold (ii) Amount 1,300 3,632
1,050 820 550 7,352 Average price ($/oz) 5.25 9.01 9.11 8.98 8.75
8.34
-------------------------------------------------------------------------
Total committed amount 1,300 4,832 1,050 820 550 8,552
-------------------------------------------------------------------------
Put options purchased(vi) Amount 1,800 3,820 1,050 820 550 8,040
Average price ($/oz) 5.21 6.40 6.89 7.25 7.25 6.34
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Copper (millions of pounds): --------------------------------------
-------------------------------------- Fixed forward contracts(i)
Amount 11,754 Average price ($/lb.) 1.05 Call options sold(ii)
Amount 66,139 Average price ($/lb.) 1.14
-------------------------------------- Total committed amount
Amount 77,713 Average price ($/lb.) 1.13
-------------------------------------- Put options purchased(vi)
Amount 66,139 Average price ($/lb.) 1.03
-------------------------------------- (i) Forward sales contracts
- Forward sales establish a selling price for future production at
the time they are entered into, thereby limiting the risk of
declining prices but also limiting potential gains on price
increases. The types of forward sales contracts used include: a)
Fixed forward contracts - a deliverable sales contract, denominated
in U.S. dollars, where the interest rate and metal lease rate of
the contract are fixed to the maturity of the contract. The average
price is based on the price at the maturity of the contract. b)
Fixed interest floating lease rate contracts - a deliverable sales
contract, denominated in U.S. dollars, which has the U.S. dollar
interest rate fixed to the maturity of the contract. Gold lease
rates are reset at rollover dates ranging from 3 months to 4 years.
The average price reflects the expected value to maturity of the
contracts based on assumed gold lease rates. c) Australian dollar
forward contracts - a deliverable sales contract denominated in
Australian dollars that has been converted to U.S. dollars at an
exchange rate of 1.2937. On a portion of these contracts, the gold
lease rates have been fixed to maturity. The remaining contracts
include a lease rate allowance or are floating at market rates.
Forward sales that are offset by call options purchased are
combined with the call option purchased and included in put options
purchased. Please refer to item (vi). (ii) Call options sold and
cap agreements - Call options sold by the Corporation provide the
buyer with the right, but not the obligation, to purchase
production from the Corporation at a predetermined price on the
exercise date of the option. Cap agreements represent sales
contracts requiring physical delivery of gold at the prevailing
spot price or the cap option price at the expiry date of the
contract. Call options and cap agreements are disclosed based on
the intended delivery date of the option. The expiry date of the
option may differ from the intended delivery date. The average
price is based on the exercise price of the options. Call options
denominated in Australian dollars have been converted to U.S.
dollars at an exchange rate of 1.2937. (iii) Firm committed ounces
- Firm committed ounces is the total of forward sales and call
options and cap agreements sold net of call options purchased. It
does not include any contingent option commitments, whether bought
or sold. (iv) Contingent call options sold - Contingent call
options sold are option contracts denominated in Australian dollars
that have been converted to U.S. dollars at an exchange rate of
1.2937. These contracts are similar to standard call options except
that they are extinguished or activated when the gold price reaches
a predetermined barrier. Contingent options are path-dependent
since they are dependent on the price movement of gold during the
life of the option or within specified time frames. Knock-out
options consist of down and out options and up and out options. A
down and out option will expire early if the gold price trades
below the barrier price within specified time frames whereas an up
and out option will expire early if the gold price trades above the
barrier price within specified time frames. Knock-in options
consist of up and in and down and in options. An up and in option
will come into existence if the gold price trades above the barrier
price within specified time frames whereas a down and in option
will come into existence if the gold price trades below the barrier
price within specified time frames. As of March 31, 2005, the
positions disclosed as contingent call options sold have not been
extinguished (knocked out) or activated (knocked in) as the gold
price has not traded above or below the barrier levels during the
specified time frames. In the event these positions are activated
they will be reclassified to call options sold. (v) Maximum
committed ounces - Maximum committed ounces is the total of firm
committed ounces and contingent call options sold. This total
represents the maximum committed ounces in each period, provided
the contingent call options sold are not extinguished or are
activated and the contingent call options purchased are not
activated. (vi) Put options purchased - Put options purchased by
the Corporation establish a minimum sales price for the production
covered by such put options and permit the Corporation to
participate in any price increases above the strike price of such
put options. Certain positions disclosed as put options are a
combination of a purchased call option and a forward sale of the
same amount and maturity. Therefore, the amount of call options
purchased offsets the committed ounces of the corresponding forward
sale. The combined instrument is referred to as a synthetic put.
(vii) Put options sold - Put options sold by the Corporation are
sold in conjunction with a forward sales contract or with the
purchase of a higher strike put option. A put option sold gives the
put buyer the right, but not the obligation, to sell gold to the
put seller at a predetermined price on a predetermined date. At
March 31, 2005, Placer Dome's consolidated foreign currency program
consists of: ----------------------------------- 2005 2006 2007
Total
---------------------------------------------------------------------
Australian Dollars (millions USD) Fixed forward contracts Amount
40.8 37.1 5.0 82.9 Average rate (AUD/USD) 1.8301 1.9167 1.5713
1.8533 Put options sold Amount - 17.0 5.5 22.5 Average rate
(AUD/USD) - 1.5957 1.6538 1.6099
---------------------------------------------------------------------
Total committed dollars Amount 40.8 54.1 10.5 105.4 Average rate
(AUD/USD) 1.8301 1.8159 1.6145 1.8014
---------------------------------------------------------------------
Call options purchased Amount 58.5 23.5 12.0 94.0 Average rate
(AUD/USD) 1.3543 1.5098 1.6430 1.4300
---------------------------------------------------------------------
Canadian Dollars (millions USD) Call options purchased Amount 49.5
- - 49.5 Average rate (CAD/USD) 1.2358 - - 1.2358
---------------------------------------------------------------------
Fixed forward contracts establish an exchange rate of U.S. dollar
to the operating currency of the region at the time they are
entered into, thereby limiting the risk of exchange rate
fluctuations. Put options sold by the Corporation provide the buyer
with the right, but not the obligation, to purchase U.S. dollars
from the Corporation at a predetermined exchange rate on the
exercise date of the options. Call options purchased by the
Corporation establish a minimum exchange rate for converting U.S.
dollars to the operating currency of the region for the amount
hedged, but permit the Corporation to participate in any further
weakness of the hedged currency. 8. Commitments and Contingencies
(a) At March 31, 2005, Placer Dome has outstanding commitments of
approximately $30 million under capital expenditure programs. (b)
The 2005 Canadian federal budget proposed phased in reductions of
the general corporate tax rate of 2% from January 1, 2008 through
January 1, 2010 and the elimination of the federal corporate surtax
effective January 1, 2008. These changes are currently being
debated within the Canadian House of Commons and may or may not
become law given the current minority government. Should the
changes be enacted, the estimated income tax impact to Placer Dome
would be a charge to deferred income tax expense of approximately
$24 million and an equivalent reduction in the deferred tax asset.
(c) In September 2002 Placer Dome Canada Limited ("PDC") lost a tax
appeal in the Ontario Superior Court related to a reassessment of
Ontario mining taxes for the 1995 and 1996 taxation years. On the
basis of the decision, Ontario mining tax and related interest
increased by approximately $1 million for the years in question.
Late in the fourth quarter of 2002 Placer Dome (CLA) Limited
("PDCLA"), the successor to PDC through amalgamation, was
reassessed with respect to the same issue for the 1997 and 1998
taxation years. Ontario mining tax and related interest increased
by approximately $16 million for these two taxation years. PDC and
PDCLA paid all taxes and related interest up to and including the
1997 taxation year by December 31, 2002 and paid the 1998
reassessment liability early in January 2003. In the third quarter
of 2003, PDCLA was reassessed with respect to the same issue for
1999. Ontario mining tax and related interest increased by
approximately $20 million for the 1999 taxation year. The 1999
reassessment liability was paid in the fourth quarter of 2003. The
Corporation filed an appeal of the decision to the Ontario Court of
Appeal in 2003. On August 31, 2004, the Ontario Court of Appeal
ruled in Placer Dome's favour in reversing the Ontario Superior
Court decision. On April 21, 2005 the Supreme Court of Canada
granted leave for the Ontario Ministry of Finance to appeal the
Ontario Court of Appeal's decision. Management is of the view that
Placer Dome will ultimately prevail, accordingly, Placer Dome has
not recorded a liability for this contingency. Placer Dome also
expects to be reimbursed for previously made cash payments
totalling $37 million plus interest. (d) In addition to the above,
reference is made to note 18 to the Consolidated Financial
Statements included in the Annual Report and Annual Information
Form/Form 40-F. Placer Dome is subject to various investigations,
claims and legal and tax proceedings covering a wide range of
matters that arise in the ordinary course of business activities.
Each of these matters is subject to various uncertainties and it is
possible that some of these matters may be resolved unfavourably to
Placer Dome. The Corporation has established accruals for matters
that are probable and can be reasonably estimated. Management
believes that any liability that may ultimately result from the
resolution of these matters in excess of amounts provided will not
have a material adverse effect on Placer Dome's financial position
or results of operations. 9. Stock-Based Compensation The
Corporation follows the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-based Compensation", for stock options
granted to employees and directors. Had compensation cost for these
grants been determined based on the fair value at the grant date
consistent with the provisions of SFAS No. 123, the Corporation's
net earnings and net earnings per share would have been adjusted to
the pro forma amounts indicated below: ---------------------- For
the three months ended March 31 ---------------------- 2005 2004 $
$
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Net earnings - as reported 31 64 Net earnings - pro forma 27 61 Net
earnings per share - as reported 0.07 0.16 Net earnings per share -
pro forma 0.06 0.15
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Placer Dome has three share option plans under which common shares
are reserved for issuance to employees and directors. At March 31,
2005, there were 9.8 million vested and 5.0 million unvested stock
options outstanding. 10. Pension Plans Pension expenses are
comprised of: ---------------------- For the three months ended
March 31 ---------------------- 2005 2004 $ $
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Defined benefit plans: Service costs (benefits earned during the
period) 2 2 Interest costs on projected benefit obligations 2 2
Expected return on plan assets (1) (2) Amortization of experience
losses 1 1
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Total defined benefit plans 4 3 Defined contribution plans 1 1
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Total pension expense 5 4
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Vancouver-based Placer Dome Inc. operates 17 mines in seven
countries. The Corporation's shares trade on the Toronto, New York,
Swiss and Australian stock exchanges and Euronext-Paris under the
symbol PDG. Placer Dome will host a conference call to discuss
first quarter results at 7:00am PDT/10:00am EDT on Wednesday, April
27. North American participants may access the call at
1-800-731-1043. International participants please dial
1-212-346-6604. The call will also be webcast on the Placer Dome
website at http://www.placerdome.com/investors/webcasts.html.
FORWARD-LOOKING STATEMENTS This report contains "forward-looking
statements" that were based on Placer Dome's expectations,
estimates and projections as of the dates as of which those
statements were made. These forward-looking statements include,
among other things, statements with respect to Placer Dome's
business strategy, plans, outlook, long-term growth in cash flow,
earnings per share and shareholder value, projections, targets and
expectations as to reserves, resources, results of exploration
(including targets) and related expenses, property acquisitions,
mine development, mine operations, mine production costs, drilling
activity, sampling and other data, recovery improvements, future
production levels, capital costs, costs savings, cash and total
costs of production of gold, copper and other minerals,
expenditures for environmental matters and technology, projected
life of our mines, reclamation and other post closure obligations
and estimated future expenditures for those matters, completion
dates for the various development stages of mines, future gold and
other mineral prices (including the long-term estimated prices used
in calculating Placer Dome's mineral reserves), the percentage of
production derived from mechanized mining, currency exchange rates,
debt reductions, and the percentage of anticipated production
covered by forward sale and other option contracts or agreements.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "anticipate",
"project", "target", "believe", "estimate", "expect", "intend",
"should" and similar expressions. Forward-looking statements are
subject to known and unknown risks, uncertainties and other factors
that may cause Placer Dome's actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking statements, including:
- uncertainties and costs related to Placer Dome's exploration and
development activities, such as those associated with determining
whether gold or other mineral reserves exist on a property; -
uncertainties related to feasibility studies that provide estimates
of expected or anticipated economic returns from a mining project;
- uncertainties related to expected production rates, timing of
production and the cash and total costs of production and milling;
- uncertainties related to the future development or implementation
of new technologies, research and development and, in each case,
related initiatives and the effect of those on our operating
performance; - uncertainties related to the accuracy of our reserve
and resource estimates and our estimates of future production and
future cash and total costs of production; - uncertainties related
to unexpected judicial or regulatory proceedings; - changes in, and
the effects of, the laws, regulations and government policies
affecting our mining operations, particularly laws, regulations and
policies relating to: - mine expansions, environmental protection
and associated compliance costs arising from exploration, mine
development, mine operations and mine closures; - expected
effective future tax rates in jurisdictions in which our operations
are located; - the protection of the health and safety of mine
workers; and - mineral rights ownership in countries where our
mineral deposits are located, including the effect of the Mineral
and Petroleum Resources Development Act (South Africa); - changes
in general economic conditions, the financial markets and in the
demand and market price for gold, copper and other minerals and
commodities, such as diesel fuel, electricity and other forms of
energy, and fluctuations in exchange rates, particularly with
respect to the value of the U.S. dollar, Canadian dollar,
Australian dollar, Papua New Guinean kina, South African rand and
Chilean peso - the effects of forward selling instruments to
protect against fluctuations in gold and copper prices and exchange
rate movements and the risks of counterparty defaults; - changes in
accounting policies and methods we use to report our financial
condition, including uncertainties associated with critical
accounting assumptions and estimates; - geopolitical uncertainty
and political and economic instability in countries which we
operate; and - labour strikes, work stoppages, or other
interruptions to, or difficulties in, the employment of labour in
markets in which we operate mines, or environmental hazards,
industrial accidents or other events or occurrences that interrupt
the production of minerals in our mines. A discussion of these and
other factors that may affect Placer Dome's actual results,
performance, achievements or financial position is contained in the
filings by Placer Dome with the U.S. Securities and Exchange
Commission and Canadian provincial securities regulatory
authorities. This list is not exhaustive of the factors that may
affect our forward-looking statements. These and other factors
should be considered carefully and readers should not place undue
reliance on such forward-looking statements. Placer Dome does not
undertake to update any forward-looking statements that are
incorporated by reference herein, except in accordance with
applicable securities laws. For further information on this report
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 On the
internet: http://www.placerdome.com/ 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 (PO Box 49330, Bentall
Postal Station) Vancouver, British Columbia Canada V7X 1P1 Tel:
(604) 682-7082 Fax: (604) 682-7092 END FIRST AND FINAL ADD
DATASOURCE: Placer Dome Inc. CONTACT: PR Newswire--April 26
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