/FIRST AND FINAL ADD - TO254 - Placer Dome Inc. Earnings/ PLACER
DOME INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (millions of United
States dollars, U.S. GAAP) (unaudited) --------------------- For
the three months ended March 31 --------------------- 2003
(restated- 2004 note 3(c)) $ $
-------------------------------------------------------------------------
Operating activities Net earnings 60 63 Add (deduct) non-cash items
Depreciation and depletion 62 66 Deferred stripping adjustment -
(3) Unrealized loss (gain) on derivatives 5 (49) Deferred
reclamation 3 5 Deferred income and resource taxes 9 1 Change in
accounting policy (note 2) - 17 Other items, net 5 3
-------------------------------------------------------------------------
Cash from operations before change in non-cash working capital 144
103 Change in non-cash operating working capital (10) (18)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash from operations 134 85
-------------------------------------------------------------------------
Investing activities Property, plant and equipment (69) (39)
Short-term investments (1) (1) Other, net 3 2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(67) (38)
-------------------------------------------------------------------------
Financing activities Long-term debt and capital leases financing
Borrowings (note 7) 5 197 Repayments (note 7) (4) (139) Common
shares issued 15 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
16 59
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Increase in cash and cash equivalents 83 106
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents Beginning of period 582 537
-------------------------------------------------------------------------
-------------------------------------------------------------------------
End of period 665 643
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(See accompanying notes to consolidated financial statements)
PLACER DOME INC. CONSOLIDATED BALANCE SHEETS (millions of United
States dollars, U.S. GAAP) (unaudited) ASSETS
---------------------- March 31 December 31 2004 2003 $ $
-------------------------------------------------------------------------
Current assets Cash and cash equivalents 665 582 Short-term
investments 10 9 Accounts receivable 140 131 Income and resource
tax assets 17 17 Inventories (note 5) 229 244
-------------------------------------------------------------------------
-------------------------------------------------------------------------
1,061 983
-------------------------------------------------------------------------
Investments 50 51 Other assets (note 6) 178 168 Deferred commodity
and currency sales contract and derivatives 54 48 Income and
resource tax assets 186 186 Deferred stripping 107 107 Purchased
undeveloped mineral interests 402 429 Goodwill 515 515 Property,
plant and equipment Cost 4,245 4,171 Accumulated depreciation and
amortization (2,187) (2,143)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2,058 2,028
-------------------------------------------------------------------------
4,611 4,515
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY ---------------------- March
31 December 31 2004 2003 $ $
-------------------------------------------------------------------------
Current liabilities Accounts payable and accrued liabilities 248
243 Income and resource taxes liabilities 35 20 Current portion of
long-term debt and capital leases 8 10
-------------------------------------------------------------------------
-------------------------------------------------------------------------
291 273
-------------------------------------------------------------------------
Long-term debt and capital leases (note 7) 1,182 1,179 Reclamation
and post closure obligations 228 225 Income and resource tax
liabilities 144 152 Deferred commodity and currency sales contracts
and derivatives 260 209 Deferred credits and other liabilities 80
78 Commitments and contingencies (notes 8, 9) Shareholders' equity
2,426 2,399
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4,611 4,515
-------------------------------------------------------------------------
(See accompanying notes to consolidated financial statements)
PLACER DOME INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(millions of United States dollars, except share amounts, U.S.
GAAP) (unaudited) --------------------- For the three months ended
March 31 --------------------- 2003 (restated- 2004 note 3(c)) $ $
-------------------------------------------------------------------------
Common shares(i), beginning of period 2,023 1,992 Exercise of
options 15 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares, end of period 2,038 1,993
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss, beginning of period (35) (50)
Unrealized gain (loss) on securities 1 (2) Unrealized gain (loss)
on derivatives Copper (30) - Currency 4 2 Reclassification of
(gain) loss on derivatives included in net earnings Copper 1 -
Currency (4) -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss, end of period (63) (50)
-------------------------------------------------------------------------
Contributed surplus, beginning of period 66 60 Stock-based
compensation 1 (3)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus, end of period 67 57
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, beginning of period 345 157 Net earnings 60 63
Common share dividends (21) (20)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, end of period 384 200
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity 2,426 2,200
-------------------------------------------------------------------------
(i) Preferred shares - unlimited shares authorized, no par value,
none issued. Common shares - unlimited shares authorized, no par
value, issued and outstanding at March 31, 2004 - 412,850,069
shares (December 31, 2003 - 411,530,294 shares). (see accompanying
notes to consolidated financial statements) PLACER DOME INC. NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) (all tabular
amounts are in millions of United States dollars, U.S. GAAP) 1. The
accompanying interim consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted ("GAAP") in the United States. 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, 2004 are not
necessarily indicative of the results that may be expected for the
full year ending December 31, 2004. For further information, see
the Corporation'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, 2003. The Corporation also prepares a reconciliation
highlighting the material differences between its interim financial
statements as prepared in accordance with U.S. GAAP as compared to
interim financial statements prepared under Canadian GAAP as well
as a Management's Discussion and Analysis focusing on these
differences (see note 11). The consolidated net earnings under
Canadian GAAP were $63 million and $65 million for the first
quarter of 2004 and 2003, respectively. Certain amounts for 2003
have been reclassified to conform with current year's presentation.
2. Change in Accounting Policy On January 1, 2003, Placer Dome
adopted SFAS 143, "Accounting for Asset Retirement Obligations"
which requires that the fair value of liabilities for asset
retirement obligations be recognized in the period in which they
are incurred. A corresponding increase to the carrying amount of
the related asset is generally recorded and depreciated over the
life of the asset. The amount of the liability is subject to
re-measurement at each reporting period. This differs from the
prior practice which involved accruing for the estimated
reclamation and closure liability through annual charges to
earnings over the estimated life of the mine. The cumulative effect
of the change through January 1, 2003, was to increase Property,
plant and equipment by $9 million and increase Deferred credits and
other liabilities by $32 million with a one time after-tax charge
to net earnings, booked in the first quarter of 2003, of $17
million ($0.04 per share). 3. Business Acquisitions and Joint
Ventures (a) Effective December 23, 2003, Placer Dome and Newmont
Mining Corporation ("Newmont") formed the Turquoise Ridge Joint
Venture. The joint venture is limited to an area of influence
surrounding the Turquoise Ridge shaft. Placer Dome retains 100%
ownership of properties outside the area of influence. Placer Dome
owns 75% of the joint venture and is the operator. Newmont acquired
a 25% ownership position in the Turquoise Ridge Joint Venture. The
2% net smelter return royalty of Placer Dome to Newmont which
existed prior to the formation of the joint venture has been
eliminated. Under an ore sale agreement, Newmont will purchase up
to approximately 1,800 tonnes per day of joint venture ore and
process it at its cost at its nearby Twin Creeks mill. Placer Dome
and Newmont will each contribute their pro-rata share of mine
development funding requirements, including capital costs and
environmental closure expenses related to future joint venture
operations. The Turquoise Ridge Joint Venture is an unincorporated
joint venture, and as such is proportionately consolidated. (b) 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. The overall purchase price
allocation is preliminary and will be finalized in the second
quarter of 2004 following the completion of an independent
appraisal. (c) On October 22, 2002, Placer Dome gained control of
AurionGold Limited ("AurionGold"). This increased the company's
ownership in the Granny Smith mine to 100% and in the Porgera mine
to 75% from 60% and 50%, respectively, and added the Henty,
Kalgoorlie West and Kanowna Belle mines to the Corporation's
holdings. With the finalization of the AurionGold purchase price
allocation in the fourth quarter of 2003, there were several
adjustments to the fair values assigned to the acquired assets and
liabilities from the initial purchase price allocation.
Accordingly, the operating results for the first three quarters of
2003 have been restated. 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. Regional corporate offices provide support
infrastructure to the mines in addressing local and regional issues
including financial, human resource and exploration support. Major
products are gold, silver 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 ----------------------- 2004 2003 $ $
-----------------------------------------------------------------
Gold 361 330 Copper 145 77 Other 2 2
-----------------------------------------------------------------
-----------------------------------------------------------------
508 409
-----------------------------------------------------------------
(b) Segment sales revenue and mine operating earnings (loss)
--------------------------------------- Sales Mine Operating
Earnings --------------------------------------- For the three
months ended March 31 --------------------------------------- 2004
2003 2004 2003 $ $ $ $
-----------------------------------------------------------------
Canada Campbell 21 18 1 4 Musselwhite 15 12 2 - Porcupine 22 19 6 2
-----------------------------------------------------------------
-----------------------------------------------------------------
58 49 9 6
-----------------------------------------------------------------
United States Bald Mountain(i) 5 12 2 2 Cortez 61 66 30 36 Golden
Sunlight(iii) 2 22 1 12 Turquoise Ridge(ii) 15 - 4 -
-----------------------------------------------------------------
-----------------------------------------------------------------
83 100 37 50
-----------------------------------------------------------------
Australia Granny Smith 21 27 (4) 6 Henty 12 6 3 - Kalgoorlie West
38 33 7 (3) Kanowna Belle 25 30 5 5 Osborne 34 20 10 1
-----------------------------------------------------------------
130 116 21 9
-----------------------------------------------------------------
Papua New Guinea Misima 13 12 3 2 Porgera 78 51 36 11
-----------------------------------------------------------------
-----------------------------------------------------------------
91 63 39 13
-----------------------------------------------------------------
South Africa South Deep 18 14 (3) 2
-----------------------------------------------------------------
-----------------------------------------------------------------
Tanzania North Mara(iv) 21 - 6 -
-----------------------------------------------------------------
Chile Zaldivar 125 61 65 12
-----------------------------------------------------------------
-----------------------------------------------------------------
Metal hedging gain (loss) (18) 6 (18) 6 Currency hedging gain - - 5
- Amortization of tax gross up(v) - - (2) (2) Stock-based
compensation - - (1) 2 Other - - (1) (2)
-----------------------------------------------------------------
-----------------------------------------------------------------
508 409 157 96
-----------------------------------------------------------------
(i) Activities at Bald Mountain in the first quarter of 2004 were
focused on pre-stripping of Stage 7 of the Top Pit. Production at
Stage 7 is scheduled to ramp up during 2004. (ii) Results include
100% of Turquoise Ridge's operating results up to December 23, 2003
and 75% thereafter. (see note 3(a)). Results from Turquoise Ridge
relate to third party ore sales. (iii) Production from Golden
Sunlight was temporarily suspended in December 2003 and will
recommence when ore is delivered from Stage 5B (pre-stripping
started in September 2003 with production scheduled to commence in
mid-2005). (iv) Results include 100% of the operations of the North
Mara mine in Tanzania from July 23, 2003 (see note 3(b)). (v)
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, the
Corporation 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. 5. Inventories comprise the
following: ---------------------- March 31 December 31 2004 2003 $
$
---------------------------------------------------------------------
Metal in circuit 102 98 Ore stockpiles 88 83 Materials and supplies
79 81 Product inventories 34 46
---------------------------------------------------------------------
---------------------------------------------------------------------
303 308 Long-term portion of ore stockpiles (74) (64)
---------------------------------------------------------------------
---------------------------------------------------------------------
Inventories 229 244
---------------------------------------------------------------------
6. Other assets consist of the following: ----------------------
March 31 December 31 2004 2003 $ $
---------------------------------------------------------------------
Sale agreement receivable(i) 71 69 Ore stockpiles (note 5) 88 83
Debt issue costs and discounts 17 17 Pension asset 15 13 Other 10
14
---------------------------------------------------------------------
---------------------------------------------------------------------
201 196 Current portion of other assets (23) (28)
---------------------------------------------------------------------
---------------------------------------------------------------------
178 168
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(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.
Long-term Debt On January 31, 2003, Placer Dome repaid, from cash,
$137 million of debt, bearing LIBOR based interest rates, assumed
in the purchase of AurionGold. On March 3, 2003, Placer Dome issued
$200 million 30-year debentures. The debentures carry an interest
rate of 6.375% and are not convertible. On April 16, 2004, Placer
Dome announced that two registration statements related to its $230
million 2.75% Convertible Debentures and $300 million 6.45%
Debentures, both originally issued in October 2003, had been filed
and declared effective by the Securities and Exchange Commission.
As a result, the Corporation has complied with the Registration
Rights Agreements for the instruments. 8. Consolidated Metals Sales
and Currency Programs At March 31, 2004, based on the spot prices
of $423.70 per ounce for gold, $7.845 per ounce for silver and
$1.391 per pound for copper and an Australian to U.S. dollar
("AUD/USD") exchange rate of $1.3104, the mark-to-market values of
Placer Dome's precious metal and copper sales programs were
negative $686 million and negative $75 million, respectively. This
does not take into the account the $192 million liability in
Deferred commodity and currency sales contracts and derivatives as
at March 31, 2004 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 its currency forward and option contracts
on March 31, 2004, was approximately positive $47 million (based on
a foreign exchanges rate of AUD/USD $1.3104), all of which has been
recognized through earnings or other comprehensive income. Gains
and losses on Placer Dome's gold and silver forward contracts and
cap agreements are recognized in sales revenue on the initial
intended delivery date, except in instances where Placer Dome
chooses to deliver prior to that date, in which case they are
recognized on delivery. Placer Dome's copper forward contracts are
accounted for as cash flow hedges with the change in fair values
recorded each period in other comprehensive income and subsequently
reclassified to sales revenue on the contract forward date. Changes
in the fair values of all other metals financial instruments are
recorded each period in earnings in the non-hedge derivative gain
(loss) line. At March 31, 2004, Placer Dome's consolidated metal
sales program consists of:
------------------------------------------------------ 2004 2005
2006 2007 2008 2009 2010+ Total
---------------------------------------------------------------------
---------------------------------------------------------------------
Gold (000s ounces):
---------------------------------------------------------------------
---------------------------------------------------------------------
Forward contracts sold(i) Fixed contracts Amount 401 947 1,139
1,075 823 269 682 5,336 Average price ($/oz.) 342 347 347 376 388
395 447 374 Fixed interest floating lease rate Amount 75 100 100
185 387 850 935 2,632 Average price ($/oz.) 309 309 309 354 389 434
467 420 A$ forward contracts Amount 10 54 63 44 15 30 60 276
Average price ($/oz.) 459 396 427 464 449 455 461 440
---------------------------------------------------------------------
Total Forward contracts sold 486 1,101 1,302 1,304 1,225 1,149
1,677 8,244 A$ forward contracts purchased (100) (75) - - - - -
(175)
---------------------------------------------------------------------
Total Forward contracts 386 1,026 1,302 1,304 1,225 1,149 1,677
8,069
---------------------------------------------------------------------
Call options sold and cap Agreements(ii) Amount 381 276 249 115 200
- - 1,221 Average price ($/oz.) 329 362 356 363 394 - - 356 A$
contracts Amount 50 65 - - - - - 115 Average price ($/oz.) 386 382
- - - - - 384
---------------------------------------------------------------------
Total Call option sold and cap agreements 431 341 249 115 200 - -
1,336
---------------------------------------------------------------------
Total Firm committed ounces(iii) 817 1,367 1,551 1,419 1,425 1,149
1,677 9,405
---------------------------------------------------------------------
Contingent call options sold(iv) Knock-in (up and in) Amount 63 128
52 - - - 64 307 Average price ($/oz.) 397 395 382 - - - 420 398
Average barrier level ($/oz.) 434 429 419 - - - 420 426 Knock out
(down and out) Amount 5 38 42 66 54 117 30 352 Average price
($/oz.) 404 406 426 434 448 426 469 432 Average barrier level
($/oz.) 353 356 387 378 366 376 382 374
---------------------------------------------------------------------
Total Maximum committed ounces(v) 885 1,533 1,645 1,485 1,479 1,266
1,771 10,064
---------------------------------------------------------------------
Put options purchased(vi) Amount 1,203 683 514 341 154 119 142
3,156 Average price ($/oz.) 351 407 419 448 419 410 440 394
---------------------------------------------------------------------
Put options sold(vii) Amount 240 80 80 - - - - 400 Average price
($oz.) 265 250 250 - - - - 259
---------------------------------------------------------------------
Contingent call options purchased not included in the above table
total 0.3 million ounces at an average price of $407 per ounce.
------------------------------ 2004 2005 2006
---------------------------------------------------------------------
---------------------------------------------------------------------
Silver (000s ounces):
---------------------------------------------------------------------
---------------------------------------------------------------------
Fixed forward contracts(i) Amount 250 - 1,200 Average price ($/oz.)
7.17 - 6.25 Call options sold(ii) Amount 1,575 1,560 1,200 Average
price ($/oz.) 5.26 5.25 7.10
---------------------------------------------------------------------
Total committed amount 1,825 1,560 2,400 Average price ($/oz.) 5.52
5.25 6.68
---------------------------------------------------------------------
Put options purchased(viii) Amount 1,575 1,560 1,200 Average price
($/oz.) 4.90 4.90 6.00
---------------------------------------------------------------------
---------------------------------------------------------------------
Copper (millions of pounds):
---------------------------------------------------------------------
---------------------------------------------------------------------
Fixed forward contracts(i) Amount 81.0 14.9 - Average price ($/lb.)
0.892 1.031 - Call options sold(ii) Amount 66.1 84.3 - Average
price ($/lb.) 0.978 1.072 -
---------------------------------------------------------------------
Total committed amount Amount 147.1 99.2 - Average price ($/lb.)
0.931 1.066 -
---------------------------------------------------------------------
Put options purchased(vi) Amount 59.5 84.3 - Average price ($/lb.)
0.881 0.973 -
---------------------------------------------------------------------
Put options sold(vii) Amount 6.6 - - Average price ($/lb.) 0.752 -
-
---------------------------------------------------------------------
(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 gold 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) A$ forward contracts - a deliverable sales
contract denominated in Australian dollars that has been converted
to U.S. dollars at an exchange rate of 1.3104. 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 1.3104. (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 1.3104. 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, 2004, 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, 2004, Placer Dome's consolidated foreign currency program
consists of:
---------------------------------------------------------------------
Maturity Quantity Average Period (millions Price (to the year) of
USD) (AUD/USD) Australian dollars Fixed forward contracts 2007 $129
$1.8146 Put options sold 2007 $54 $1.6483
---------------------------------------------------------------------
Total committed dollars $183 $1.7655
---------------------------------------------------------------------
Call options purchased 2007 $83 $1.4868
---------------------------------------------------------------------
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 in the hedged currency. 9. Commitments and Contingencies
(a) At March 31, 2004, Placer Dome has outstanding commitments of
approximately $30 million under capital expenditure programs. (b)
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 $17 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 $21 million for this 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 and is awaiting the result of the case which was
heard in March 2004. Should Placer Dome lose, the total tax and
interest payable would be approximately $77 million of which $39
million has been paid as noted above. (c) 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 the financial position or results
of operations of the Corporation. 10. Common Shares 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 (loss) and net earnings (loss) per share would have
been adjusted to the pro forma amounts indicated below:
---------------------- For the three months ended
---------------------- 2004 2003 $ $
---------------------------------------------------------------------
Net earnings - as reported 60 63 Net earnings - pro forma 57 60 Net
earnings per share - as reported 0.15 0.15 Net earnings per share -
pro forma 0.14 0.15
---------------------------------------------------------------------
Placer Dome has three share option plans, two of which reserve
shares of common stock for issuance to employees and directors. At
March 31, 2004, there were 10.5 million vested and 6.1 million
unvested stock options outstanding. 11. Canadian GAAP a)
Reconciliation from U.S. GAAP to Canadian GAAP The consolidated
financial statements of Placer Dome Inc. have been prepared in
accordance with accounting principles generally accepted in the
U.S. and the accounting rules and regulations of the Securities and
Exchange Commission ("U.S. GAAP") which differ in certain material
respects from those principles and practices that Placer Dome would
have followed had its consolidated financial statements been
prepared in accordance with accounting principles and practices
generally accepted in Canada ("Canadian GAAP"). The following is a
reconciliation of the net earnings (loss) between the U.S. and the
Canadian basis: ---------------------- For the three months ended
March 31 ---------------------- 2004 2003 $ $
-----------------------------------------------------------------
Net earnings reported under US GAAP 60 63 Interest and financing
expense(i)(ii) 1 6 Unrealized non-hedge derivatives(iii) 7 (14)
Difference due to write-down values for Osborne and Porgera(iv) (3)
(3) Stock-based compensation(vii) (2) - Change in accounting
policies(v) - 17 Other 2 1 Taxes (2) (5)
-----------------------------------------------------------------
-----------------------------------------------------------------
Net earnings reported under Canadian GAAP 63 65
-----------------------------------------------------------------
The significant differences between Canadian and U.S. GAAP that
impact the consolidated financial statements of Placer Dome include
the following: (i) Preferred Securities of $77 million (December
31, 2003 - $77 million), under U.S. GAAP, are accounted for as
long-term debt. Under Canadian GAAP, these securities are accounted
for as equity with the related interest expense reported as
dividend. On redemption of the Preferred Securities, gains and
losses are reported in the statement of earnings as investment
income under U.S. GAAP, whereas under Canadian GAAP, it is credited
to contributed surplus. The interest expense/dividends in the first
quarter were $2 million (2003- $6 million). (ii) In October, 2003
Placer Dome issued $230 million of senior convertible debentures.
Under the U.S. basis, these are accounted for as debt. Under the
Canadian basis, there is a debt and an equity portion. The proceeds
of the offering are allocated between the debt and equity portion
using the residual method. The debt portion is determined by
discounting its cash flows using a market interest rate for
comparable debt instruments and the equity portion, reflected in
contributed surplus, represents the difference between the proceeds
and the amount allocated to the debt portion. The carrying value of
the debt is accreted to its face value through periodic charges to
interest expense. The amount of accretion in the first quarter of
2004 was $1 million. (iii) Under U.S. GAAP, metal option (puts and
calls) contracts which are not settled through physical delivery
and foreign currency forward and option (puts and calls) contracts
that are used for managing non-specific foreign cost exposures are
marked-to-market with the change in value recorded in earnings in
the period as non-hedge derivative gains (losses). Under Canadian
GAAP, all such contracts are accounted for off balance sheet with
the exception of open call positions which follow the same
accounting as U.S. GAAP and those currency contracts acquired,
which were set up at market value on the date of acquisition. Under
Canadian GAAP, gains (losses) realized on metal option contracts
are included in sales, and gains (losses) realized on foreign
currency forward and option contracts are included in cost of
sales. (iv) Prior to 2003, under the U.S. basis, impairment
provisions on long-lived assets were calculated on a fair value
basis whereas under the Canadian basis they were calculated on an
undiscounted basis. In 2000, Placer Dome wrote down certain assets,
resulting in differences in the carrying values of Porgera and
Osborne. The difference remaining on the balance sheet at March 31,
2004 is $76 million (December 31, 2003 - $80 million). (v) On
January 1, 2003, under the U.S. basis, Placer Dome adopted FAS 143,
"Accounting for Asset Retirement Obligations" (see note 2), and
under the Canadian basis, adopted CICA 3110, "Asset Retirement
Obligations", which requires that the fair value of liabilities for
asset retirement obligations be recognized in the period in which
they are incurred. Under the U.S. basis, it was applied
prospectively with a cumulative effect of $17 million booked
through earnings in the first quarter of 2003. Under the Canadian
basis the new policy was applied retroactively with restatement of
2002 and 2001 comparative figures and an increase to the net
earnings in 2002 and 2001. (vi) The investment in La Coipa (50%) is
in the form of an incorporated joint venture. Under U.S. GAAP, La
Coipa is accounted for on an equity basis at $35 million (December
31, 2003 - $36 million), whereas under Canadian GAAP the investment
is proportionately consolidated with a net balance of $44 million
(December 31, 2003 - $46 million) recorded under Property, plant
and equipment. Although this impacts individual line items, the net
earnings impact is nil. (vii) Under the U.S. basis, in accordance
with SFAS No. 123 "Accounting for Stock-based Compensation" ("SFAS
123"), Placer Dome applies Accounting Principles Board ("APB")
Opinion No. 25 and related interpretations in the accounting for
employee stock option plans, and follows the disclosure only
provisions of SFAS 123. For stock options granted to employees and
directors, no compensation expense is recognized because the
exercise price is equal to the market price of Placer Dome's common
stock on the date of grant. For Canadian dollar denominated stock
options granted to non-Canadian employees, variable accounting is
applied. For stock options granted to personnel at joint ventures,
deferred compensation charges based on the fair value of the
options granted are expensed over the vesting period. Under the
Canadian basis, the Company has, effective January 1, 2003,
prospectively early adopted CICA 3870 "Stock Based Compensation",
which requires fair value accounting for all stock options issued
during the year. (viii) In addition to the above, reference is made
to the Canadian basis consolidated financial statements in the
Management Proxy Circular and Statement filed with various Canadian
regulatory authorities and note 20(d) to the 2003 Consolidated
Financial Statements included in the Annual Report and Annual
Information Form/Form 40-F. b) Management's Discussion and Analysis
Management's Discussion and Analysis in this document is based on
consolidated financial statements of Placer Dome Inc. prepared in
accordance with U.S. GAAP. Set out below are the significant
differences if the Management's Discussion and Analysis had been
based on Canadian GAAP. - Consolidated net earnings in accordance
with Canadian GAAP for the first quarter of 2004 were $63 million
($0.15 per share after dividends on preferred securities) compared
with $65 million ($0.15 per share) the same period in 2003. -
Pre-tax non-hedge derivative gains in the first quarter of 2004
were $nil million (2003 - $34 million). Included in this amount are
net unrealized non-cash gains of $2 million (2003 - gain of $35
million), the 2003 gains were primarily related to the
mark-to-market value changes on foreign currency forward and option
contracts and Australian dollar denominated metal derivative
instruments acquired with AurionGold, which do not qualify for
hedge accounting, covering future periods. - Interest and financing
expenses were $18 million in the first three months of 2004,
respectively (2003 - $12 million). The increase relates to interest
on debt entered into in 2003 after the end of the first quarter. -
Consolidated short-term and long-term debt balances at March 31,
2004, were $1,072 million, compared with $1,070 million at December
31, 2003. Financing activities in the first quarter of 2004
included net debt additions of $1 million and the issuance of $15
million of common shares. Financing activities in the first three
months of 2003 included $200 million of 6.375% 30-year debentures
raised through a private placement and the repayment of $137
million of debt assumed in the AurionGold acquisition. There were
no dividend payments in the first quarter of 2004, in the first
quarter of 2003 $2 million in dividends was paid relating to the
preferred shares. Vancouver-based Placer Dome Inc. operates 18
mines on five continents. The company'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 6:00am
PDT/9:00am EDT on Tuesday, April 27. North American participants
may access the call at (800) 298-3006. International participants
please dial (416) 620-5690. The call will also be webcast on the
Placer Dome website at http://www.placerdome.com/. The conference
call will be available for replay until May 27, 2004 by dialling
416-626-4100, reservation number 21192402. For further information
on this report please contact:
------------------------------------------------------ Investor
Relations: Greg Martin (604) 661-3795 Media Relations: Theresa
Coles (604) 661-1911 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 CAUTIONARY NOTE --------------- Some of the statements
contained in this report are forward-looking statements, such as
estimates and statements that describe Placer Dome's future plans,
expectations, objectives or goals, including words to the effect
that Placer Dome or management expects a stated condition or result
to occur. Forward-looking statements may be identified by such
terms as "believes", "anticipates", "intends", "expects",
"estimates", "may", "could", "would", "will" or "plan". Such
forward-looking statements are made pursuant to the safe harbour
provisions of the United States Private Securities Litigation
Reform Act of 1995. Since forward-looking statements are based on
assumptions and address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results relating to, among other things, mineral reserves,
resources, results of exploration, reclamation and other
post-closure costs, capital costs, mine production costs, and
Placer Dome's financial condition and prospects, could differ
materially from those currently anticipated in such statements by
reason of factors such as the productivity of Placer Dome's mining
properties, changes in general economic conditions and conditions
in the financial markets, changes in demand and prices for the
minerals Placer Dome produces, litigation, environmental,
legislative and other judicial, regulatory, political and
competitive developments in domestic and foreign areas in which
Placer Dome operates, technological and operational difficulties
encountered in connection with Placer Dome's mining activities,
labour relations matters, costs and changing foreign exchange rates
and other matters discussed under "Management's Discussion and
Analysis" or detailed in Placer Dome's filings with securities
regulatory authorities. This list is not exhaustive of the factors
that may affect any of Placer Dome's forward-looking statements.
These and other factors should be considered carefully and readers
should not place undue reliance on Placer Dome's forward-looking
statements. Further information regarding these and other factors
which may cause results to differ materially from those projected
in forward-looking statements are included in the filings by Placer
Dome with the U.S. Securities and Exchange Commission and Canadian
provincial securities regulatory authorities. "Placer Dome" is used
in this report to collectively mean Placer Dome Inc., its
subsidiary companies and its proportionate share of joint ventures.
"Placer Dome's share" is defined to exclude minority shareholders'
interest. The "Corporation" and "the company" refer to Placer Dome
Inc. Placer Dome does not undertake to update any forward-looking
statement that may be made from time to time by Placer Dome or on
its behalf, except in accordance with applicable securities laws.
END FIRST AND FINAL ADD DATASOURCE: Placer Dome Inc. CONTACT: PR
Newswire - - April 26
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