/FIRST AND FINAL ADD -- TO290 -- Placer Dome earnings/ PLACER DOME
INC. CONSOLIDATED STATEMENTS OF EARNINGS (millions of U.S. dollars,
except share and per share amounts, U.S. GAAP) (unaudited)
--------------------------------------------- September 30
--------------------------------------------- Third Quarter Nine
Months --------------------------------------------- 2004 2003 2004
2003 (restated- (restated- note 3(c)) note 3(c)) $ $ $ $
-------------------------------------------------------------------------
Sales (note 4) 453 464 1,428 1,271 Cost of sales 283 285 840 797
Depreciation and amortization 61 66 184 196
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Mine operating earnings (note 4(b)) 109 113 404 278
-------------------------------------------------------------------------
General and administrative 17 12 48 37 Exploration 19 20 52 54
Resource development, technology and other 14 22 45 54
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating earnings 59 59 259 133
-------------------------------------------------------------------------
Non-hedge derivative gains (loss) (1) (33) (15) 44 Investment and
other business income (loss) 10 6 (15) (2) Interest and financing
expense (19) (13) (56) (46)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Earnings before taxes and other items 49 19 173 129
-------------------------------------------------------------------------
Income and resource tax recovery (notes 7 and 10(b)) 99 8 64 32
Equity in earnings of associates - - 5 3 Minority interests - - (1)
1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earning before the cumulative effect of change in accounting
policy 148 27 241 165
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Changes in accounting policies (note 2) - - 4 (17)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings 148 27 245 148
-------------------------------------------------------------------------
Comprehensive income 148 33 253 160
-------------------------------------------------------------------------
Per common share Net earnings (and diluted net earnings) before the
cumulative effect of changes in accounting policies 0.36 0.06 0.58
0.40 Net earnings 0.36 0.06 0.59 0.36 Diluted net earnings 0.34
0.06 0.57 0.36 Dividends 0.05 0.05 0.10 0.10
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Weighted average number of common shares (millions) Basic 413.5
409.3 412.9 409.0 Diluted 432.0 410.0 432.1 409.7
-------------------------------------------------------------------------
(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)
--------------------------------------------- September 30
--------------------------------------------- Third Quarter Nine
Months --------------------------------------------- 2004 2003 2004
2003 (restated- (restated- note 3(c)) note 3(c)) $ $ $ $
-------------------------------------------------------------------------
Operating activities Net earnings 148 27 245 148 Add (deduct)
non-cash items Depreciation and depletion 61 66 184 196 Deferred
stripping adjustment (11) 6 (34) 3 Cumulative translation
adjustment - - 34 - Unrealized loss (gain) on derivatives 1 34 3
(41) Deferred commodity and currency derivatives (3) (14) (13) (34)
Deferred reclamation 7 (3) 8 16 Deferred income and resource taxes
(94) (17) (98) (63) Changes in accounting policies (note 2) - - (4)
17 Other items, net (4) 16 6 31
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash from operations before change in non-cash operating working
capital 105 115 331 273 Change in non-cash operating working
capital (14) 10 1 (5)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash from operations 91 125 332 268
-------------------------------------------------------------------------
Investing activities Property, plant and equipment (88) (57) (237)
(150) Purchase of East African Gold Limited (note 3(b)) - (252) -
(252) Short-term investments (1) - (5) (2) Other, net 14 6 17 8
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(75) (303) (225) (396)
-------------------------------------------------------------------------
Financing activities Short-term debt, net (note 8(b)) 85 164 90 165
Restricted cash (note 8(b)) (90) - (90) - Long-term debt and
capital leases Borrowings (note 8(a)) - - 5 196 Repayments (note
8(a)) (31) (3) (38) (529) Common shares issued 6 9 26 11 Redemption
of minority interest - - - (1) Dividends paid Common shares (20)
(20) (41) (41) Minority interest - (2) - (3)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(50) 148 (48) (202)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (34) (30) 59 (330)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash and cash equivalents Beginning of period 675 237 582 537
-------------------------------------------------------------------------
End of period 641 207 641 207
-------------------------------------------------------------------------
(See accompanying notes to the unaudited interim consolidated
financial statements) PLACER DOME INC. CONSOLIDATED BALANCE SHEETS
(millions of United States dollars, U.S. GAAP) (unaudited) ASSETS
---------------------------- September 30, December 31, 2004 2003
(restated- note 3(b)) $ $
-------------------------------------------------------------------------
Current assets Cash and cash equivalents 641 582 Short-term
investments 14 9 Restricted cash (note 8(b)) 90 - Accounts
receivable 113 131 Income and resource tax assets 60 17 Inventories
(note 5) 228 244
-------------------------------------------------------------------------
-------------------------------------------------------------------------
1,146 983
-------------------------------------------------------------------------
Investments 48 51 Other assets (note 6) 177 168 Deferred commodity
and currency sales contracts and derivatives 38 48 Income and
resource tax assets 311 230 Deferred stripping 155 107 Purchased
undeveloped mineral interests 469 522 Goodwill (notes 3(b) and (c))
454 454 Property, plant and equipment Cost 4,249 4,165 Accumulated
depreciation and amortization (2,140) (2,143)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2,109 2,022
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4,907 4,585
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY ----------------------------
September 30, December 31, 2004 2003 (restated- note 3(b)) $ $
-------------------------------------------------------------------------
Current liabilities Short-term debt (note 8(b)) 90 - Accounts
payable and accrued liabilities 245 243 Income and resource taxes
liabilities 34 26 Current portion of long-term debt and capital
leases (note 8(a)) 3 10
-------------------------------------------------------------------------
-------------------------------------------------------------------------
372 279
-------------------------------------------------------------------------
Long-term debt and capital leases (note 8(a)) 1,153 1,179
Reclamation and post closure obligations 232 225 Income and
resource tax liabilities 211 216 Deferred commodity and currency
sales contracts and derivatives 221 209 Deferred credits and other
liabilities 78 78 Commitments and contingencies (notes 9, 10)
Shareholders' equity 2,640 2,399
-------------------------------------------------------------------------
-------------------------------------------------------------------------
4,907 4,585
-------------------------------------------------------------------------
(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)
--------------------------------------------- September 30
--------------------------------------------- Third Quarter Nine
Months --------------------------------------------- 2004 2003 2004
2003 (restated- (restated- note 3(c)) note 3(c)) $ $ $ $
-------------------------------------------------------------------------
Common shares(i), beginning of period 2,043 1,994 2,023 1,992
Exercise of options 6 9 26 11
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Common shares, end of period 2,049 2,003 2,049 2,003
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss, beginning of period (27) (44)
(35) (50) Unrealized gain (loss) on securities 3 2 (1) 1 Unrealized
gain (loss) on derivatives Copper (10) (2) (24) (1) Currency 6 6 -
13 Reclassification of (gain) loss on derivatives included in net
earnings Copper 3 - 7 - Currency (2) - (8) - Unrealized change in
the minimum pension liability - - - (1) Reclassification of
cumulative translation account loss included in net earnings - - 34
-
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated other comprehensive loss, end of period (27) (38) (27)
(38)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus, beginning of period 68 59 66 60 Stock-based
compensation 1 2 3 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Contributed surplus, end of period 69 61 69 61
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, beginning of period 421 258 345 157 Net earnings
148 27 245 148 Common share dividends (20) (21) (41) (41)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Retained earnings, end of period 549 264 549 264
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Shareholders' equity 2,640 2,290 2,640 2,290
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(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 September 30, 2004 - 413,789,005 shares (December
31, 2003 - 411,530,294). (See accompanying notes to the unaudited
interim consolidated financial statements) PLACER DOME INC. NOTES
TO INTERIM 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 United States ("U.S.") generally accepted accounting
principles ("GAAP") for interim financial information. 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 nine months ended September
30, 2004 are not necessarily indicative of the results that may be
expected for the full year ending December 31, 2004 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,
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 13). The consolidated net earnings under Canadian GAAP
were $273 million and $133 million for the nine months ended
September 2004 and 2003, respectively, and $144 million and $25
million for the third quarter of 2004 and 2003, respectively.
Certain amounts for 2003 have been reclassified to conform with the
current year basis of presentation. 2. Changes in Accounting
Policies and Other Adjustments (a) 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 Financial Statement Accounting Board's
("FASB") Emerging Issues Task Force ("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). The EITF is currently discussing the appropriateness
and timing of capitalization and amortization of deferred stripping
costs for mining operations. Should the EITF reach a consensus,
Placer Dome may be required to make further changes to its related
accounting policies. As part of its review of deferred stripping
accounting at the Cortez joint venture, Placer Dome determined that
estimates relating to the cost of contained ounces of gold on the
heap leach pad needed to be revised. This resulted in an
adjustment, during the first quarter of 2004, which decreased
earnings, on a pre and after tax basis by $3 million ($0.01 per
share) and $2 million ($0.01 per share), respectively. (b) During
the second quarter of 2004, Placer Dome changed its accounting
policy, prospectively from April 1, 2004, with respect to mineral
rights to reclassify them from intangible to tangible assets. This
change was made as a result of deliberations by the EITF at its
March 17-18, 2004 meeting, subsequently approved by FASB, which
concluded mining rights should be classified as tangible assets.
Prior to this change in accounting policy, Placer Dome had recorded
mineral rights as intangible assets on its consolidated balance
sheet as purchased undeveloped mineral interests and amortized the
excess of the carrying value over the residual value on a
straight-line basis over the period that it expected to convert,
develop or further explore the underlying properties. Due to this
change in accounting policy, Placer Dome has ceased amortization of
the excess of the carrying over the residual value of these assets
and accounts for them according to its accounting policy for
property, plant and equipment. If this change had been adopted
January 1, 2003, it would have increased Placer Dome's earnings on
a pre and after tax basis in the following periods: for the first
nine months of 2003 by $7 million ($0.02 per share) and $5 million
($0.01 per share), respectively; for the third quarter of 2003 by
nil (nil per share) and nil (nil per share), respectively, and for
the first quarter of 2004 by $3 million ($0.01 per share) and $2
million (nil per share), respectively. (c) 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
Venture (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, Placer Dome completed the acquisition of 100% of the
shares of East African Gold Mines Limited ("East African Gold").
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. With the
finalization of the East African Gold purchase price equation in
the second quarter of 2004, there were several adjustments to the
fair values assigned to the acquired assets and liabilities from
the initial purchase price allocation. Accordingly, Placer Dome's
December 31, 2003 consolidated balance sheet has been restated to
reflect these changes. Net earnings for 2003 and the first quarter
of 2004 were not re-stated as the effect on the post acquisition
period in those years was not material. (c) On October 22, 2002,
Placer Dome gained control of AurionGold Limited ("AurionGold").
This increased Placer Dome'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
Placer Dome'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 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
------------------------------------------ September 30
------------------------------------------ Third Quarter Nine
Months ------------------------------------------ 2004 2003 2004
2003 $ $ $ $
---------------------------------------------------------------------
Gold 336 384 1,038 1,038 Copper 116 79 386 229 Other 1 1 4 4
---------------------------------------------------------------------
---------------------------------------------------------------------
453 464 1,428 1,271
---------------------------------------------------------------------
(b) Segment sales revenue and mine operating earnings (loss)
------------------------------------------ Sales revenue by mine
------------------------------------------ September 30
------------------------------------------ Third Quarter Nine
Months ------------------------------------------ 2004 2003 2004
2003 $ $ $ $
---------------------------------------------------------------------
Canada Campbell 28 19 66 52 Musselwhite 17 14 49 40 Porcupine 19 23
65 65
---------------------------------------------------------------------
---------------------------------------------------------------------
64 56 180 157
---------------------------------------------------------------------
United States Bald Mountain 5 8 14 28 Cortez 66 53 196 170 Golden
Sunlight(i) - 23 2 65 Turquoise Ridge(ii) 5 11 30 16
---------------------------------------------------------------------
---------------------------------------------------------------------
76 95 242 279
---------------------------------------------------------------------
Australia Granny Smith 31 28 70 76 Henty 10 9 44 23 Kalgoorlie West
26 34 88 105 Kanowna Belle 25 21 70 73 Osborne 30 18 92 49
---------------------------------------------------------------------
---------------------------------------------------------------------
122 110 364 326
---------------------------------------------------------------------
Papua New Guinea Misima(v) 1 12 23 35 Porgera 71 64 221 165
---------------------------------------------------------------------
---------------------------------------------------------------------
72 76 244 200
---------------------------------------------------------------------
South Africa - South Deep 23 21 61 57 Tanzania - North Mara(iii) 20
17 60 17 Chile - Zaldivar 108 64 343 188 Metal hedging gain (loss)
(32) 25 (66) 47
---------------------------------------------------------------------
---------------------------------------------------------------------
453 464 1,428 1,271
---------------------------------------------------------------------
------------------------------------------ Mine operating earnings
(loss) ------------------------------------------ September 30
------------------------------------------ Third Quarter Nine
Months ------------------------------------------ 2004 2003 2004
2003 $ $ $ $
---------------------------------------------------------------------
Canada Campbell 5 5 11 12 Musselwhite 2 2 6 2 Porcupine 4 7 16 14
---------------------------------------------------------------------
---------------------------------------------------------------------
11 14 33 28
---------------------------------------------------------------------
United States Bald Mountain - 2 2 5 Cortez (note 2(a)) 33 26 99 87
Golden Sunlight(i) - 13 1 36 Turquoise Ridge(ii) (2) 2 2 3
---------------------------------------------------------------------
---------------------------------------------------------------------
31 43 104 131
---------------------------------------------------------------------
Australia Granny Smith (note 3(c)) - 2 (5) 11 Henty (note 3(c)) 2 3
14 2 Kalgoorlie West (note 3(c)) (2) (1) 4 (5) Kanowna Belle (note
3(c)) 5 4 14 14 Osborne 9 1 29 2
---------------------------------------------------------------------
---------------------------------------------------------------------
14 9 56 24
---------------------------------------------------------------------
Papua New Guinea Misima(v) - (3) 6 1 Porgera (note 3(c)) 33 16 92
25
---------------------------------------------------------------------
---------------------------------------------------------------------
33 13 98 26
---------------------------------------------------------------------
South Africa - South Deep (1) 2 (7) 5 Tanzania - North Mara(iii) 4
1 16 1 Chile - Zaldivar 54 14 176 31 Metal hedging gain (loss) (32)
25 (66) 47 Currency hedging gain 2 - 9 - Amortization of tax gross
up(iv) (3) (3) (8) (6) Stock-based compensation (2) (3) (4) (2)
Other (2) (2) (3) (7)
---------------------------------------------------------------------
---------------------------------------------------------------------
109 113 404 278
---------------------------------------------------------------------
(i) 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 March 2005). (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) Results include 100% of the operations
of the North Mara mine from July 23, 2003 (see note 3(b)). (iv)
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. (v) Processing of ore ceased at Misima
in May 2004. 5. Inventories comprise the following:
---------------------------- September 30, December 31, 2004 2003 $
$
---------------------------------------------------------------------
Metal in circuit 92 98 Ore stockpiles 105 83 Materials and supplies
79 81 Product inventories 28 46
---------------------------------------------------------------------
---------------------------------------------------------------------
304 308 Long-term portion of ore stockpiles (76) (64)
---------------------------------------------------------------------
---------------------------------------------------------------------
Inventories 228 244
---------------------------------------------------------------------
6. Other assets consist of the following:
---------------------------- September 30, December 31, 2004 2003 $
$
---------------------------------------------------------------------
Sale agreement receivable(i) 64 69 Ore stockpiles (note 5) 105 83
Debt issue costs and discounts 17 17 Pension asset 21 13 Other 7 14
---------------------------------------------------------------------
---------------------------------------------------------------------
214 196 Current portion of other assets (37) (28)
---------------------------------------------------------------------
---------------------------------------------------------------------
177 168
---------------------------------------------------------------------
(i) In December 2000, Compania Minera Zaldivar completed the sale
of some of its water rights for a sum of $135 million, receivable
in 15 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.
Income and Resource Taxes See note 10(b) for a discussion of Placer
Dome's reversal of a previously accrued tax and interest liability
of $76 million relating to Ontario mining taxes during the third
quarter of 2004. During the third quarter of 2004, Placer Dome
determined that, due to a more positive outlook for its Australian
operations including an improved gold price environment, only $24
million of its deferred tax assets for tax benefits relating to
these operations required a valuation allowance. Pursuant to this,
the valuation allowance was reduced to that level by recording a
non-cash credit of $37 million to Income and resource tax recovery
in the income statement during the quarter. At December 31, 2002,
Placer Dome had a deferred tax asset of $165 million for tax
benefits relating to its United States operations. At that time a
full valuation allowance had been set up against the asset. During
the first two quarters of 2003, Placer Dome utilized $16 million of
this deferred tax asset. As of June 30, 2003, Placer Dome
determined that, due to a more positive outlook for its United
States operations including an improved gold price environment and
the approval of Top Pit Stage 7 at the Bald Mountain Mine, only
$110 million of this valuation allowance was required. Pursuant to
this, a non-cash credit of $39 million to Income and resource tax
recovery (provision) was recorded in the income statement during
the second quarter of 2003. 8. Debt (a) Consolidated long-term debt
and capital leases comprise the following:
---------------------------- September 30 December 31
---------------------------- 2004 2003 $ $
---------------------------------------------------------------------
Placer Dome Inc. Bonds, unsecured June 15, 2007 at 7.125% per annum
100 100 June 15, 2015 at 7.75% per annum 100 100 March 3, 2033 at
6.375% per annum 200 200 October 15, 2035 at 6.45% per annum 300
300 Preferred Securities, unsecured Series B, December 31, 2045 at
8.5% per annum 77 77 Medium - term notes, unsecured 140 140 Senior
Convertible Debentures, unsecured, October 15, 2023 at 2.75% 230
230 East African Gold, non-recourse - 36 Capital leases 9 6
---------------------------------------------------------------------
---------------------------------------------------------------------
1,156 1,189 Current portion (3) (10)
---------------------------------------------------------------------
---------------------------------------------------------------------
1,153 1,179
---------------------------------------------------------------------
On July 29, 2004, Placer Dome repaid the non-recourse loan relating
to East African Gold's project financing for the North Mara mine.
Placer Dome entered into a new unsecured revolving credit agreement
with a syndicate of lenders effective July 20, 2004. The facility
is available for use for general corporate purposes. The agreement
permits borrowings of up to $850 million, with a $300 million
sub-limit for letters of credit, until its maturity on July 20,
2009. The agreement requires the Corporation to maintain a
consolidated tangible net worth of $1.5 billion. This agreement
replaced a two-tranche credit facility of $685 million, a portion
of which was scheduled to be renewed on September 8, 2004 ($285
million) and a portion that was scheduled to expire on September 8,
2005 ($400 million). 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. On May 15, 2003, Placer Dome, as
scheduled, repaid, with cash, $200 million of 7.125% unsecured
bonds. On April 24, 2003, Placer Dome redeemed, for cash, all of
the Corporation's outstanding $185 million 8.625% Series A
Preferred Securities. On March 3, 2003, Placer Dome completed a
private placement of $200 million 30 year debentures. The
debentures carry an interest rate of 6.375% and are not
convertible. On May 27, 2003 a registration statement related to
these debentures was filed with and declared effective by the
Securities and Exchange Commission. As a result, the Corporation
has complied with the Registration Rights Agreements for the
instruments. On January 31, 2003, Placer Dome repaid, from cash,
$137 million of debt, bearing LIBOR based interest rates, assumed
in the purchase of AurionGold. (b) During the quarter, Placer Dome
entered into a demand financing facility which permits borrowings
of up to $120 million. The facility also requires cash to be placed
on deposit with the lender in an amount equal to drawdowns. The net
effective interest rate to Placer Dome of this is 0.4% per annum.
At September 30, 2004, $90 million had been drawn on the facility
and an equal amount had been placed on deposit. 9. Consolidated
Metals Sales and Currency Programs At September 30, 2004, based on
the spot prices of $415.65 per ounce for gold, $6.905 per ounce for
silver and $1.424 per pound for copper and an Australian to U.S.
dollar ("AUD/USD") exchange rate of $1.3872, the mark-to-market
values of Placer Dome's precious metal and copper sales programs
were negative $600 million and negative $42 million, respectively.
This includes the negative mark-to-market related to the hedge
books acquired in the AurionGold and East African Gold
transactions, but does not take into account the $188 million
liability in Deferred commodity and currency sales contracts and
derivatives as at September 30, 2004 relating primarily to the
remaining provision booked on acquisition for the fair value of
those metal hedge books. For the currency program, the
mark-to-market value of its currency forward and option contracts
on September 30, 2004, was approximately positive $33 million
(based on a foreign exchanges rate of AUD/USD $1.3872), all of
which has been recognized through earnings or other comprehensive
income. Gains and losses on Placer Dome's gold and silver forward
contracts and cap agreements are recognized in sales revenue on the
initial intended delivery date, except in instances where Placer
Dome chooses to deliver prior to that date, in which case they are
recognized on delivery. Placer Dome's copper forward contracts are
accounted for as cash flow hedges with the change in fair values
recorded each period in other comprehensive income and subsequently
reclassified to sales revenue on the contract forward date. Changes
in the fair values of all other metals financial instruments are
recorded each period in earnings in the non-hedge derivative gain
(loss) line. At September 30, 2004, Placer Dome's consolidated
metals sales program consisted of:
-------------------------------------------------------- 2004 2005
2006 2007 2008 2009 2010+ Total
-------------------------------------------------------------------------
Gold (000's ounces):
-------------------------------------------------------------------------
Forward contracts sold(i) Fixed contracts Amount 156 1,047 1,239
1,245 978 307 682 5,654 Average price ($/oz.) 338 343 344 373 397
404 448 375 Fixed interest floating lease rate Amount - - - 15 232
813 935 1,995 Average price ($/oz.) - - - 416 358 435 469 442 A$
forward contracts Amount - 3 15 24 - 30 60 132 Average price
($/oz.) - 408 445 450 - 430 435 437
-------------------------------------------------------------------------
Total forward contracts sold A$ forward contracts purchased - (75)
- - - - - (75)
-------------------------------------------------------------------------
Total forward contracts 156 975 1,254 1,284 1,210 1,150 1,677 7,706
-------------------------------------------------------------------------
Call options sold and cap Agreements(ii) Amount 169 276 249 115 200
- - 1,009 Average price ($/oz.) 340 362 356 363 394 - - 363 A$
contracts Amount 19 65 - - - - - 84 Average price ($/oz.) 360 361 -
- - - - 361
-------------------------------------------------------------------------
Total call option sold and cap agreements 188 341 249 115 200 - -
1,093
-------------------------------------------------------------------------
Total firm committed ounces(iii) 344 1,316 1,503 1,399 1,410 1,150
1,677 8,799
-------------------------------------------------------------------------
Contingent call options sold(iv) Knock-in (up and in) Amount 27 128
52 - 11 - 64 282 Average price ($/oz.) 376 373 361 - 425 - 396 378
Average barrier level ($/oz.) 411 405 396 - 451 - 396 404 Knock out
(down and out) Amount - 38 42 66 54 117 30 347 Average price
($/oz.) - 383 402 410 423 403 443 409 Average barrier level ($/oz.)
- 336 365 357 345 355 360 353
-------------------------------------------------------------------------
Total maximum committed ounces(v) 371 1,482 1,597 1,465 1,475 1,267
1,771 9,428
-------------------------------------------------------------------------
Put options purchased(vi) Amount 433 693 512 359 179 129 142 2,447
Average price ($/oz.) 352 406 417 442 409 396 429 405
-------------------------------------------------------------------------
Put options sold(vii) Amount 80 80 80 - - - - 240 Average price
($oz.) 265 250 250 - - - - 255
-------------------------------------------------------------------------
Contingent call options purchased not included in the above table
total 0.1 million ounces at an average price of $401 per ounce.
------------------------------- 2004 2005 2006
---------------------------------------------------------------------
Silver (000's ounces):
---------------------------------------------------------------------
Fixed forward contracts(i) Amount - - 1,200 Average price ($/oz.) -
- 6.25 Call options sold(ii) Amount 525 1,560 1,800 Average price
($/oz.) 5.26 5.25 7.40
---------------------------------------------------------------------
Total committed amount 525 1,560 3,000 Average price ($/oz.) 5.26
5.25 6.94
---------------------------------------------------------------------
Put options purchased(vi) Amount 525 1,560 1,800 Average price
($/oz.) 4.90 4.90 6.17
---------------------------------------------------------------------
---------------------------------------------------------------------
Copper (millions of pounds):
---------------------------------------------------------------------
---------------------------------------------------------------------
Fixed forward contracts(i) Amount 24.8 14.9 - Average price ($/lb.)
0.90 1.03 - Call options sold(ii) Amount 23.1 101.4 - Average price
($/lb.) 0.99 1.10 -
---------------------------------------------------------------------
Total committed amount Amount 47.9 116.3 - Average price ($/lb.)
0.94 1.09 -
---------------------------------------------------------------------
Put options purchased(vi) Amount 23.1 100.9 - Average price ($/lb.)
0.88 1.00 -
---------------------------------------------------------------------
(i) Forward sales contracts - Forward sales establish a selling
price for future production at the time they are entered into,
thereby limiting the risk of declining prices but also limiting
potential gains on price increases. The types of forward sales
contracts used include: a) Fixed forward contracts - a deliverable
sales contract, denominated in U.S. dollars, where the interest
rate and gold lease rate of the contract are fixed to the maturity
of the contract. The average price is based on the price at the
maturity of the contract. b) Fixed interest floating lease rate
contracts - a deliverable sales contract, denominated in U.S.
dollars, which has the U.S. dollar interest rate fixed to the
maturity of the contract. Gold lease rates are reset at rollover
dates ranging from 3 months to 4 years. The average price reflects
the expected value to maturity of the contracts based on assumed
gold lease rates. c) A$ forward contracts - a deliverable sales
contract denominated in Australian dollars that has been converted
to U.S. dollars at an exchange rate of $1.3872. 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 $1.3872. (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 $1.3872. 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 September 30, 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 September 30, 2004,
Placer Dome's consolidated foreign currency program consists of:
-------------------------------------------------------------------------
Maturity Period Quantity Average Price Australian dollars (to the
year) ($ millions) (AUD/USD)
-------------------------------------------------------------------------
Fixed forward contracts 2007 $110.7 $1.8222 Put options sold 2007
$41.3 $1.6186
-------------------------------------------------------------------------
Total committed dollars $152.0 $1.7669
-------------------------------------------------------------------------
Call options purchased 2007 $60.0 $1.5098
-------------------------------------------------------------------------
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. 10. Commitments and Contingencies
(a) At September 30, 2004, Placer Dome has outstanding commitments
of approximately $40 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 $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. The Ontario Ministry of Finance has sought leave to
appeal the Ontario Court of Appeal's decision to the Supreme Court
of Canada. Management is of the view, that even should an
application for appeal to the Supreme Court of Canada be accepted,
Placer Dome will ultimately prevail. Accordingly, Placer Dome has
reversed a previously accrued tax and interest related liability of
$76 million. This reversal was recorded as income in the third
quarter of 2004. Placer Dome also expects to be reimbursed for
previously made cash payments totalling $37 million plus interest.
(c) Placer Dome and Marcopper Mining Corporation ("Marcopper") are
named as defendants (the "Defendants") in two complaints detailed
below (the "Complaints") filed in the Regional Trial Court (the
"Court"), Fourth Judicial Region, Boac, Marinduque, Philippines
respecting alleged damages arising from the mining operations of
the Marcopper Mine. The Marcopper Mine is located on the island
province of Marinduque, 165 kilometers southeast of Manila in the
Philippines. Since the commissioning of the Marcopper Mine in 1969,
the mine has been owned and operated by Marcopper. The Marcopper
Mine ceased mining operations in 1996. Placer Dome owned a minority
shareholding in Marcopper until it divested all of its interests in
Marcopper in 1997. In April 2001, a complaint was filed in the
Court (the "Mogpog Complaint") by Rita Natal and 60 other
individuals (the "Mogpog Plaintiffs") against the Defendants. The
claim made against the Defendants is for recovery of damages in the
total amount of P41,193,267 (approximately US$750,000) arising from
alleged tortious acts and omissions by the Defendants that
contributed to the siltation and flooding of the Mogpog River in
Marinduque, Philippines. The Mogpog Plaintiffs also seek an order
for the closure and removal of the Marcopper Mine dumps and an
order compelling the complete rehabilitation and restoration of the
Mogpog River to its natural state. In July 2004, the Court
dismissed the case on its own motion on grounds that the Mogpog
Plaintiffs had not complied with the Court's prior orders with
respect to service of the Mogpog Complaint and had not diligently
prosecuted the case. In August 2004, the Plaintiffs filed a motion
for reconsideration of the dismissal order which to date has not
been heard by the Court. To date, the Court has not effected
service of the Mogpog Complaint on Placer Dome. Based on
evaluations of the Mogpog Complaint and the applicable law,
management believes that Placer Dome should not be liable for
damages or held responsible for other claims. In July 2004, a
complaint was filed in the Court (the "Calancan Bay Complaint")
framed as a proposed class action against the Defendants for
alleged total damages of P49.192 billion (approximately US$900
million) relating to the deposit of tailing from the Marcopper Mine
into Calancan Bay (located off the northern part of Marinduque).
The class of plaintiffs (the "Calancan Bay Plaintiffs") are
fishermen who are residents of barangays (communities) that
surround Calancan Bay. The Calancan Bay Plaintiffs also claim to be
suing on behalf of future generations of unborn Calancan Bay
residents. Among other matters, the Calancan Bay Complaint alleges
that the Defendants' decision to deposit mine tailing into Calancan
Bay over a 16 year period has resulted in serious health problems
and a general loss of livelihood. To date, the Court has not
effected service of the Calancan Bay Complaint on Placer Dome.
Evaluation of the Calancan Bay Complaint is in its early stages;
however, management believes based on the applicable law, that the
case is not suitable for determination as a class action, that the
damages alleged are significantly overstated and that, in any
event, Placer Dome should not be liable for such damages.
Management is continuing its investigation of the facts and the
allegations in the complaints, and related developments as they
occur. If either of the complaints proceeds, management intends to
vigorously defend against all claims made. (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. 11. Stock-Based Compensation Placer Dome
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, Placer Dome's net
earnings and net earnings per share would have been adjusted to the
pro forma amounts indicated below:
------------------------------------------ September 30
------------------------------------------ Third Quarter Nine
Months ------------------------------------------ 2004 2003 2004
2003 $ $ $ $
---------------------------------------------------------------------
Net earnings - as reported 148 27 245 148 Net earnings - pro forma
145 24 237 139 Net earnings per share - as reported 0.36 0.06 0.59
0.36 Net earnings per share - pro forma 0.35 0.05 0.57 0.34
---------------------------------------------------------------------
Placer Dome has three share option plans, two of which reserve
shares of common stock for issuance to employees and directors. At
September 30, 2004, there were 9.5 million vested and 5.8 million
unvested stock options outstanding. On October 13, 2004, the FASB
concluded that Statement 123R, "Share- Based Payment, an Amendment
of FASB Statements No. 123 and 95" ("SFAS 123R"), which would
require all companies to measure compensation cost for all
share-based payments (including employee stock options) at fair
value, would be effective for public companies for interim or
annual periods beginning after June 15, 2005. This Statement would
eliminate the ability to account for stock-based compensation
transactions using APB 25 and generally would require instead that
such transactions be accounted for using a fair-value based method,
with a binomial or lattice model preferred to the Black-Scholes
valuation model. The FASB's current plan is to issue a final
Statement on or around December 15, 2004. Placer Dome is currently
evaluating the impact of SFAS 123R. 12. Pension Plans Pension
expenses are comprised of:
------------------------------------------ September 30
------------------------------------------ Third Quarter Nine
Months ------------------------------------------ 2004 2003 2004
2003 $ $ $ $
---------------------------------------------------------------------
Defined benefit plans: Service costs (benefits earned during the
period) 1 2 4 5 Interest costs on projected benefit obligations 2 2
7 7 Expected return on plan assets (2) (2) (6) (5) Amortization of
experience (gains) losses 1 1 2 2
---------------------------------------------------------------------
Total defined benefit plans 2 3 7 9 Defined contribution plans 1 1
4 4
---------------------------------------------------------------------
---------------------------------------------------------------------
Total pension expense 3 4 11 13
---------------------------------------------------------------------
13. Canadian GAAP (a) Reconciliation from U.S. GAAP to Canadian
GAAP The unaudited interim 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:
------------------------------------------ September 30
------------------------------------------ Third Quarter Nine
Months ------------------------------------------ 2004 2003 2004
2003 $ $ $ $
---------------------------------------------------------------------
Net earnings - U.S. GAAP 148 27 245 148 Interest and financing
expense(i),(ii) 1 2 3 10 Unrealized non-hedge derivatives(iii) - 4
8 (23) Early deliveries of hedge contracts(iv) 2 (10) 3 (16)
Difference due to write-down values for Osborne and Porgera(v) (4)
(3) (9) (9) Stock-based compensation(ix) (3) - (8) - Change in
accounting policy(vi),(vii) - - (4) 17 Cumulative translation
adjustment(x) - - 34 - Loss on redemption of preferred
securities(i) - - - 5 Other 1 4 3 7 Taxes (1) 1 (2) (6)
---------------------------------------------------------------------
---------------------------------------------------------------------
Net earnings - Canadian GAAP 144 25 273 133
---------------------------------------------------------------------
Some of 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 dividends. 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
nine months and the third quarter of 2004 were $5 million and $2
million, respectively (2003 - $10 million and $2 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 amounts of accretion in
the first nine months and the third quarter of 2004 were $2 million
and $1 million, respectively. (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 contracts
acquired, which was 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) Of Placer Dome's metals program, the majority
relates to gold metal forward contracts and cap agreements that are
exempt from SFAS 133 as normal course sales requiring settlements
through physical delivery. Gains and losses on these instruments
are recognized in sales revenue on the delivery date identified at
the contract inception, except in instances where Placer Dome, in
accordance with the contractual agreements, chooses to deliver into
the contracts prior to the initial delivery date and recognizes the
gains and losses on delivery. Under Canadian GAAP the gains and
losses on contracts that Placer Dome delivered into prior to the
initial delivery dates are deferred and recognized in income on the
forward date identified in the contract. (v) 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 September 30, 2004 is $69 million (December 31,
2003 - $80 million). (vi) 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. (vii) 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 of 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 Financial Statement Accounting Board's
("FASB") Emerging Issues Task Force ("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. Under the U.S. basis, it was applied prospectively with a
cumulative effect of $4 million booked through earnings in the
first quarter of 2004. Under the Canadian basis the new policy was
applied retroactively with restatement of 2003 and 2002 comparative
figures and an increase to the net earnings in 2003 and 2002.
(viii)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 $34 million (December 31, 2003 - $36
million), whereas under Canadian GAAP the investment is
proportionately consolidated with a net balance of $39 million
(December 31, 2003 - $46 million) recorded under Property, plant
and equipment. Although this impacts individual line items, the net
earnings impact is nil. (ix) 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 Corporation has, effective January 1, 2003,
prospectively early adopted CICA 3870 "Stock Based Compensation",
which requires fair value accounting for all stock options issued.
(x) The cumulative translation adjustment of $34 million was
recognized on the cessation of commercial production at the Misima
operations in the second quarter of 2004. Under Canadian GAAP, the
cumulative translation adjustment related to Misima was nil. The
use of the different exchange rates and the different adoption
dates for Canadian and U.S. GAAP purposes gave rise to a difference
in the cumulative translation adjustment account within
shareholders' equity. Effective January 1, 1991 Placer Dome adopted
the U.S. dollar as its reporting currency. Prior to this change the
Canadian dollar had been used as the reporting currency. Under the
Canadian basis Placer Dome's financial statements for all years
prior to January 1, 1991 have been translated from Canadian dollars
to U.S. dollars using the exchange rate in effect at December 31,
1990. Under the U.S. basis, pre-1991 financial statements must be
translated by the current rate method using year-end or annual
average exchange rates, as appropriate. This translation approach
has been applied from August 13, 1987, the date Placer Dome was
formed by the amalgamation of three predecessor companies. 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 the unaudited
interim 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 nine months and three months
ended September 30, 2004 were $273 million ($0.65 per share after
dividends on preferred securities) and $144 million ($0.34 per
share), respectively, compared with $133 million ($0.30 per share)
and $25 million ($0.06 per share) for the same periods in 2003. -
Pre-tax non-hedge derivative gains (losses) in the first nine
months and third quarter of 2004 were a gain of $1 million and a
loss of $2 million, respectively (2003 - gain of $17 million and
loss of $30 million). Included in these amounts are a net
unrealized non-cash gain of $5 million and loss of $1 million for
the first nine months and third quarter, respectively (2003 - gain
of $18 million and loss of $30 million). The 2003 gains and losses
were primarily related to the mark-to-market value changes on
Australian dollar denominated metal derivative instruments acquired
with AurionGold, which do not qualify for hedge accounting,
covering future periods. - Investment and other business income in
the first nine months and third quarter of 2004 were $20 million
and $10 million, respectively, compared with $2 million and $6
million in the comparative prior year periods. The income in 2004
was largely due to the sale of various assets. - Interest and
financing expenses were $54 million and $18 million in the first
nine months and third quarter of 2004, respectively (2003 - $36
million and $11 million). The increases relate to higher average
debt levels in 2004, partially offset by lower interest rates. -
Consolidated short-term and long-term debt balances at September
30, 2004, were $1,128 million, compared with $1,070 million at
December 31, 2003. 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 third quarter results at 7:00am PDT/
10:00am EDT on Thursday, October 28. North American participants
may access the call at (800) 424-9805. International participants
please dial (416) 620-2400. 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 November 11, 2004 by
dialing (416) 626- 4100, reservation No. 21210728. 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 On the internet:
http://www.placerdome.com/ 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, taxes,
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, the speculative nature of mining exploration and
development activities, changes in general economic conditions and
conditions in the financial markets, including changes to the
interest rate on borrowings, changes in demand and prices for the
minerals Placer Dome produces, changes in the worldwide price of
other commodities such as diesel fuel and electricity, 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 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 -- Oct. 27
Copyright