UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(x) Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the Quarterly Period Ended September 30, 1994
( ) Transition report pursuant to section 13 or 15(d) of
the Securities Exchange Act of 1934.
For the transition period from ______ to ______
Commission File Number 1-8736
HOMESTAKE MINING COMPANY
A Delaware Corporation
IRS Employer Identification No. 94-2934609
650 California Street
San Francisco, California 94108-2788
Telephone: (415) 981-8150
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------------ ----------
The number of shares of common stock outstanding as of October
31, 1994 was 137,779,000.
Page 1<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
PART 1 - FINANCIAL INFORMATION
- -------------------------------
Item 1. Financial Statements
- -----------------------------
A. Condensed Consolidated Balance Sheets (unaudited)
-----------------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------ -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 121,284 $ 134,719
Short-term investments 80,431
Trade receivables 17,337 4,059
Income tax, interest and other receivables 49,745 24,590
Inventories:
Finished products 16,434 9,548
Ore and in-process 34,216 22,465
Supplies 28,240 34,526
Other 5,918 8,303
------------- ------------
Total current assets 353,605 238,210
------------- ------------
Property, plant and equipment - at cost 1,577,306 1,540,218
Accumulated depreciation, depletion
and amortization (759,717) (709,990)
------------ ------------
Net property, plant and equipment 817,589 830,228
------------ ------------
Investments and other assets:
Noncurrent investments 18,543 20,632
Other assets 26,767 32,180
------------ ------------
Total investments and other assets 45,310 52,812
------------ ------------
Total Assets $1,216,504 $1,121,250
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,958 $ 33,002
Accrued liabilities:
Payroll and other compensation 20,298 19,053
Reclamation 16,000 14,041
Other 19,415 24,653
Income and other taxes payable 7,930 9,816
Current portion of long-term debt 3,785
------------ ------------
Total current liabilities 93,601 104,350
------------ ------------
Long-term liabilities:
Long-term debt 185,000 189,191
Other long-term obligations 109,863 93,674
------------ ------------
Total long-term liabilities 294,863 282,865
------------ ------------
Deferred income and mining taxes 162,310 164,030
Minority interest in consolidated
subsidiaries 81,629 54,761
Shareholders' equity:
Capital stock, $1 par value per share:
Preferred - 10,000 shares authorized;
no shares outstanding
Common - 250,000 shares authorized;
shares outstanding: 1994 - 137,762;
1993 - 137,494 137,762 137,494
Other shareholders' equity 446,339 377,750
------------ ------------
Total shareholders' equity 584,101 515,244
------------ ------------
Total Liabilities and Shareholders'
Equity $1,216,504 $1,121,250
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
2<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
B. Condensed Statements of Consolidated Income (unaudited)
-------------------------------------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Product sales $163,598 $180,597 $497,554 $528,237
Interest income 2,723 1,267 6,673 3,450
Equity earnings 812 274 2,312 (224)
Gain on issuance of stock
by subsidiary 11,224
Other income (expense) (142) (1,698) 23,709 6,061
--------- --------- --------- ---------
166,991 180,440 541,472 537,524
--------- --------- --------- ---------
Costs and Expenses:
Production costs 111,326 110,684 327,389 344,556
Depreciation, depletion and
amortization 19,419 25,828 60,613 78,645
Administrative and general
expense 9,028 9,837 27,868 30,659
Exploration expense 6,943 4,306 14,944 12,454
Interest expense 2,345 2,572 7,872 5,986
Other expense 390 6,902 6,154 12,309
--------- --------- ---------- ---------
149,451 160,129 444,840 484,609
--------- --------- ---------- ---------
Income Before Taxes and
Minority Interest 17,540 20,311 96,632 52,915
Income and Mining Taxes (5,055) 3,825 (23,333) (11,544)
Minority Interest (1,636) (1,397) (5,281) (1,777)
--------- --------- ---------- ---------
Net Income $ 10,849 $ 22,739 $ 68,018 $ 39,594
======== ======== ========= ========
Net Income Per Share $ 0.08 $ 0.16 $ 0.49 $ 0.28
======== ======== ======== ========
Average Shares Used in
the Computation 137,742 137,191 137,717 136,959
======== ======== ======== ========
Dividends Per Common Share $ 0.05 $ 0.025 $ 0.125 $ 0.075
======== ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
3<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
C. Condensed Statements of Consolidated Cash Flows (unaudited)
------------------------------------------------------------
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1994 1993
---------- ----------
<S> <C> <C>
Cash Flows from Operations:
Net income $ 68,018 $ 39,594
Reconciliation to net cash
provided by operations:
Depreciation, depletion and
amortization 60,613 78,645
Deferred taxes, minority interest
and other 27,727 13,213
Gain on disposals of assets (19,056) (4,489)
Gain on issuance of stock
by subsidiary (11,224)
Effect of changes in operating
working capital items (30,059) (5,851)
--------- ---------
Net cash provided by operations 96,019 121,112
--------- ---------
Investment Activities:
Decrease (increase) in short-term
investments (80,871) 13,091
Additions to property, plant and
equipment (56,116) (41,516)
Proceeds from sales of assets 22,792 5,565
Other (6,489) 1,070
---------- ---------
Net cash used in investment activities (120,684) (21,790)
---------- ---------
Financing Activities:
Proceeds from debt 146,150
Debt repayments (8,352) (187,303)
Dividends paid - common shares (17,216) (10,274)
- preferred shares (885)
Common shares issued 4,928 6,643
Stock issued by subsidiary 31,870
Sale of Homestake stock held
by subsidiary 6,361
Redemption of HCI preference shares (15,810)
Other 1,462
----------- ---------
Net cash provided by (used in)
financing activities 11,230 (53,656)
----------- ---------
Net increase (decrease) in cash
and equivalents (13,435) 45,666
Cash and equivalents, January 1 134,719 54,208
---------- ---------
Cash and equivalents, September 30 $121,284 $99,874
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
4<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
- ---------------------------------------------------------------
1. The condensed consolidated financial statements included
herein should be read in conjunction with the financial
statements and notes thereto, which include information as
to significant accounting policies, in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
The information furnished in this report reflects all
adjustments which, in the opinion of management, are
necessary for a fair statement of the results for the
interim periods. Except as described in Notes 2 through 5,
such adjustments consist of items of a normal, recurring
nature. Results of operations for interim periods are not
necessarily indicative of results for the full year.
2. In June 1994, Prime Resources Group Inc. (Prime) completed a
transaction whereby Prime issued five million common shares
at approximately $6.70 per share to the public. Net
proceeds of $31.9 million are being used to fund a portion
of the construction and development costs of the Eskay Creek
mine. This transaction resulted in a reduction of the
Company's interest in Prime from 54.2% to 50.6%. The
Company recorded a gain of $11.2 million on the transaction
in recognition of the net increase in value of the Company's
interest in Prime. Deferred income taxes were not provided
on this gain since the Company's tax basis in Prime
substantially exceeds its book carrying value.
3. Other income (expense) for the nine months ended September
30, 1994 includes a gain of $15.7 million on the May 1994
sale of the Dee mine to Rayrock Mines, Inc. (Rayrock).
Rayrock assumed responsibility for and indemnified Homestake
against all related environmental and reclamation matters.
Total proceeds from this sale were $16.5 million.
4. Other expense for the nine months ended September 30, 1994
includes a $5 million accrual recorded in the second quarter
for additional estimated reclamation costs for non-operating
properties.
Other expense for the three and nine months ended September
30, 1993 includes a charge of $5.8 million for additional
pension and postretirement medical costs related to an early
retirement program at the Lead mine in South Dakota. Other
expense for the nine months ended September 30, 1993 also
includes restructuring expenses of $1.9 million related to
the reorganization of Homestake Gold of Australia, including
the relocation of its principal office.
5. In July 1993, the Company sold its 83% interest in North
American Metals Corp. for $1.1 million plus a retained
royalty interest. Results for the three and nine months
ended September 30, 1993 include a pretax gain of $0.5
million and an income tax benefit of $12.9 million on this
transaction.
6. Under the Company's foreign currency protection program, the
Company has entered into a series of foreign currency option
contracts which establish trading ranges within which the
United States dollar may be exchanged for foreign currencies
by setting minimum and maximum exchange rates. Option
contracts outstanding as of September 30, 1994 were as
follows:
<TABLE>
<CAPTION>
Exchange Rates
Amount Covered to U.S. $ Expiration
Currency (U.S. Dollars) Minimum Maximum Dates
------------------------------------------------------------
<S> <C> <C> <C> <C>
Canadian $113,400,000 0.67 0.79 1994-1997
Australian 43,800,000 0.61 0.76 1994-1995
------------
$157,200,000
</TABLE>
5<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
7. The Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA) imposes heavy liabilities on
persons who discharge hazardous substances. The
Environmental Protection Agency (EPA) publishes a
National Priorities List (NPL) of known or threatened
releases of such substances.
An 18-mile stretch of Whitewood Creek in the Black Hills
of South Dakota is a site on the NPL. The EPA asserts
that discharges of tailings by mining companies,
including the Company, for more than 100 years have
contaminated soil and water. In 1990, the Company signed
a consent decree with the EPA that requires the Company
to perform remedial work on the site and long-term
monitoring. The on-site remedial work has been
completed.
The millsite at the Company's discontinued uranium
operations near Grants, New Mexico is also listed on the
NPL. The EPA asserted that leakage from the tailings
facility has contaminated a shallow aquifer that serves
nearby residential subdivisions. The Company paid the
costs for installing a municipal water supply and
continues to operate an injection and collection system
that has significantly improved the water quality. The
Company has decommissioned and disposed of the uranium
mills and has closed the tailings impoundments.
Title X of the Energy Policy Act of 1992 (the Act)
authorized appropriations of $310 million to cover the
Federal Government's share of certain costs of
reclamation, decommissioning and remedial action for
byproduct material (primarily tailings) generated by
certain licensees as an incident of uranium sales to the
Federal Government. Reimbursement is subject to
compliance with regulations issued by the Department of
Energy (DOE). The DOE has acknowledged that the Company
is an eligible participant pursuant to the Act and that
the Company may submit requests for reimbursement under
the Act for 51% of the past and future costs of
reclaiming the Grants site in accordance with the
approved reclamation plan and Nuclear Regulatory
Commission license requirements. The Company estimates
the total costs to reclaim the Grants facility, including
costs incurred to date by the Company, will be $59.2
million. The DOE's share of these estimated costs will
amount to approximately $30.2 million. Congress has
appropriated $83 million in fiscal years 1994 and 1995
for disbursement to eligible licensees. The Company has
submitted an initial claim of $14.1 million for the DOE's
share of past costs incurred through December 31, 1993.
This amount has been recorded as a receivable ($11.6
million classified as current and $2.5 million as
noncurrent) in the accompanying balance sheet at
September 30, 1994 with a corresponding $14.1 million
increase in long-term accrued reclamation.
In 1983, the state of New Mexico made a claim against the
Company for unspecified natural resource damages
resulting from the Grants tailings. The state of South
Dakota made a similar claim in 1983 as to the Whitewood
Creek tailings. The Company denies all liability for
damages at the two CERCLA sites. The two states have
taken no action to enforce the 1983 claims.
The Company believes that the ultimate resolution of
these matters will not have a material adverse impact on
its financial condition.
6<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Item 2 - Management's Discussion and Analysis of Financial
------------------------------------------------
Condition and Results of Operations
-----------------------------------
RESULTS OF OPERATIONS
----------------------
(Unless specifically stated otherwise, all comments,
production statistics, etc. relate to amounts included in the
consolidated financial statements including the Company's
interests in mining partnerships accounted for using the
equity method, without reduction for minority interest.)
The Company recorded net income of $10.8 million or $0.08 per
share in the third quarter of 1994 compared to $22.7 million
or $0.16 per share in the third quarter of 1993. The 1993
third quarter results included a $12.9 million tax benefit on
the sale of North American Metals Corp. and a $5.8 million
charge ($4.8 million after tax) for an early retirement
program at the Homestake mine in South Dakota. After
adjusting for these prior year items, the 1994 third quarter
results reflect lower production, partially offset by an
increase in the average realized gold price. Year-to-date net
income in 1994 increased to $68 million or $0.49 per share
from $39.6 million or $0.28 per share in the first nine months
of 1993. The year-to-date 1994 results include pretax gains of
$15.7 million ($12.6 million after tax) from the sale of the
Company's interest in the Dee mine in Nevada and $11.2 million
($11.2 million after tax) on a reduction of the Company's
interest in Prime Resources Group Inc. (Prime) following
Prime's sale of additional shares to the public.
Revenue from product sales of $163.6 million during the 1994
third quarter decreased from $180.6 in the prior year's third
quarter reflecting a 14% decrease in ounces of gold sold,
partially offset by a $9 increase in the average realized gold
price. During the 1994 third quarter, the Company sold
417,400 ounces of gold at an average realized price of $385
per ounce compared to 484,000 ounces at an average realized
price of $376 per ounce in the prior year's third quarter.
The lower 1994 sales volume is partially due to the sales in
prior periods of the Dee and Mineral Hill mines and the
November 1993 completion of mining at the Santa Fe mine in
Nevada. After adjusting for the foregoing, production from
the Company's operations decreased by 10% during the third
quarter of 1994 compared to the third quarter of 1993.
Production from domestic gold operations totalled 198,500
ounces in the 1994 third quarter, a decrease of 20% from the
1993 third quarter. After adjusting for the decrease in
production from the Dee, Mineral Hill and Santa Fe mines
discussed above, production from domestic gold operations
declined 14% primarily due to lower production at the
Homestake mine in South Dakota and at the McLaughlin mine in
California. Production at the Homestake mine totalled 97,400
ounces during the third quarter of 1994 compared to 111,600
ounces during the third quarter of 1993. This decline
primarily is attributable to development and pre-stripping
activity at the mine's Open Cut and the collapse of a
ventilation raise in the underground operations which
restricted access to the higher grade mining areas. Cash
costs at the Homestake mine were $295 per ounce in the 1994
third quarter compared to $267 per ounce during the prior
year's third quarter. Production at the McLaughlin mine
decreased by 24% to 59,700 ounces during the 1994 third
quarter as lower grades from the South Pit replaced ore from
the North Pit where mining was completed earlier this year.
The lower production resulted in an increase in the McLaughlin
mine's cash costs to $267 per ounce during the third quarter
of 1994 from $192 per ounce during the third quarter of 1993.
Overall foreign gold production during the third quarter of
1994 declined 6% from the prior year's third quarter. The
Williams mine produced 52,400 ounces at a cash cost of $203
per ounce during the 1994 third quarter compared to 63,700
ounces at a cash cost of $186 per ounce during the 1993 third
quarter. The decrease in the Williams mine production is due
to an expected decline in ore grades. Gold production at the
David Bell mine decreased 11% to 24,900 ounces during the 1994
third quarter reflecting lower recovery rates due to an
anticipated decline in ore grades. Cash costs at the David
Bell mine increased from $146 per ounce during the third
quarter of 1993 to $157 per ounce during the third quarter of
1994. Production at the Nickel Plate mine during the 1994
third quarter of 19,400 ounces compares to 17,200 ounces
produced during the 1993 third quarter. The increase in
production at the Nickel Plate mine primarily is due to higher
grades, offset by lower recovery rates associated with the
processing of siliceous ore.
Homestake Gold of Australia's (HGAL) share of gold production
at the Kalgoorlie operations in Western Australia decreased by
3% to 84,400 ounces during the third quarter of 1994. This
decrease primarily is due to 4,800 ounces payable to HGAL's
joint venture partner under the disproportionate sharing
calculation for the third quarter of 1994. No ounces were
payable to HGAL's joint venture partner in the comparable 1993
period. Cash costs at the Kalgoorlie operations increased to
$261 per ounce in the 1994 third quarter from $227 in the
prior year's third quarter primarily due to the strengthening
of the Australian dollar. Cash costs per ounce measured in
local currency only increased by 3.2%. Gold production at the
El Hueso mine in Chile totalled 14,100 ounces during the third
quarter of 1994 compared to 13,300 ounces in the third quarter
of 1993 reflecting slightly higher grades and an increase in
tons leached.
7<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis (continued)
-----------------------------------------------
The Company's overall cash cost per ounce during the third
quarter of 1994 was $259 compared to $230 during the third
quarter of 1993.
The Main Pass 299 sulphur project recorded operating earnings
of $0.5 million during the 1994 third quarter compared to
operating losses of $3.3 million during the 1993 third
quarter. The increase in profitability primarily is
attributable to rising sulphur prices and higher sulphur
production levels, which averaged 6,600 tons per day (100%
basis) during the third quarter.
Year-to-date 1994 revenues from product sales of $497.6
million were 6% lower than year-to-date 1993 revenues of
$528.2 million reflecting lower gold sales volumes, partially
offset by higher average realized gold prices. The Company's
1994 year-to-date average realized gold price was $384 per
ounce compared to $355 per ounce during the first nine months
of 1993. The lower gold sales volumes are due to lower
production at the Company's continuing operations, the absence
of production from mines sold and the completion of mining
activities at the Santa Fe mine. Also, production exceeded
sales by 8,300 ounces during the first nine months of 1994
compared to a 48,300 ounce reduction in inventory in the first
nine months of 1993. Primarily as a result of the lower
production, the Company's year-to-date cash costs increased to
$246 per ounce from $229 per ounce in the nine months of 1993.
Depreciation, depletion and amortization expense of $19.4
million during the third quarter of 1994 compares to $25.8
million during the third quarter of 1993 and year-to-date
depreciation expense of $60.6 million compares to $78.6
million during the first nine months of 1993. The decrease in
depreciation expense primarily is due to the lower 1994
production and the write-down of the oil and gas assets at the
Main Pass 299 operations at December 31, 1993.
Administrative and general expense decreased by 9% to $27.9
million during the first nine months of 1994 reflecting
continued cost restraints and the impact of the 1992 and 1993
restructuring programs. Exploration expense increased from
$12.5 million during the first nine months of 1993 to $14.9
million during the first nine months of 1994. This increase
primarily is due to increased activity at the Ruby Hill
advanced exploration project in Nevada, partially offset by
the cessation of the North Homestake project during the first
quarter of 1994.
Other expense for the first nine months of 1994 includes a $5
million accrual for additional estimated reclamation costs for
non-operating properties. Other expense for the first nine
months of 1993 includes the $5.8 million charge related to the
early retirement program at the Homestake mine, $2.9 million
of pre-feasibility costs related to the Eskay Creek mine and
$1.9 million of costs related to the restructuring of HGAL.
On May 5, 1994 the Company completed the sale of its interest
in the Dee mine to Rayrock Mines, Inc. (Rayrock) for $16.5
million. Rayrock assumed responsibility for and indemnified
Homestake against all related environmental and reclamation
matters.
In June 1994, Prime completed a transaction whereby it issued
five million common shares at approximately $6.70 per share to
the public. Net proceeds of $31.9 million are being used to
fund a portion of the construction and development costs of
the Eskay Creek mine. This transaction resulted in a
reduction of the Company's interest in Prime from 54.2% to
50.6%. The Company recorded a gain of $11.2 million on the
transaction in recognition of the net increase in value of the
Company's interest in Prime.
Approximately one-half of Homestake's gold sales are generated
outside the United States, principally in Canada and
Australia. The value of these countries' currencies can
fluctuate significantly compared with the U.S. dollar. During
the 1993 first quarter, the Company implemented a program to
establish exchange rate ranges within which a portion of U.S.
dollar receipts from the sale of gold may be converted into
the currencies of these countries. Under existing SEC
pronouncements, contracts entered into under this program do
not qualify for hedge accounting and must be marked to market.
At September 30, 1994 the Company had a net unrealized gain of
$2.1 million on open contracts.
Other income for the first nine months of 1994 includes the
gain of $15.7 million on the sale of the Company's interest in
the Dee mine, $2.6 million of royalty income, $2.1 million of
insurance proceeds, a gain of $1.3 million related to the sale
of HGAL's Fortnum property and a net foreign currency exchange
loss of $1.1 million. The net foreign currency loss included
$3.4 million in gains under the foreign currency protection
program, offset by foreign currency transaction losses
primarily on the repayments of intercompany debt denominated
in Canadian dollars. Other income for the first nine months
of 1993 includes a $4 million gain on the sale of a mineral
property in Canada, $3.5 million of royalty income and $3
million in foreign currency exchange losses, primarily net
unrealized losses related to the foreign currency exchange
program.
8<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis (continued)
-----------------------------------------------
The Company currently is benefitting from tax loss
carryforwards and the reversals of other tax valuation
allowances in foreign jurisdictions. The Company expects that
at current gold prices these items will be fully absorbed by
the end of 1994 and, as a result, the Company expects to be
subject to a higher effective tax rate in 1995.
Construction of the Eskay Creek mine is substantially
complete. Mine development has commenced and initial ore
shipments to third party smelters are planned for January
1995.
A feasibility study on the Ruby Hill gold project will
commence in the fourth quarter of 1994.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash provided by operations totalled $96 million in the first
nine months of 1994 compared to $121.1 million in the prior
year's nine month period. Working capital at September 30,
1994 amounted to $260 million, including $201.7 million in
cash and short-term investments.
Capital additions of $56.1 million during the first nine
months of 1994 included $24.5 million for construction and
development work at the Eskay Creek mine and $16.9 million
primarily for Open Cut development and pre-stripping at the
Homestake mine. Approximately $45 million (HGAL's share) of
capital expenditures for mill expansions and modifications are
currently planned at the Kalgoorlie operations during the
October 1994 to December 1995 time period. These
modifications are needed to replace the capacity of the Oroya
mill which will be dismantled in 1995 to allow for an
expansion of the Super Pit.
In February 1994, the Company repaid its $8.3 million of
Australian finance lease debt. At September 30, 1994, the
Company has no required debt payments until the year 2000.
Additionally, Homestake has a $150 million line of credit
under which borrowings may be drawn in U.S. dollars, Canadian
dollars, gold ounces or a combination of these. No amounts
have been borrowed under this facility. In October 1994, the
Company amended its line of credit to reduce borrowings costs,
extend the maturity by one year to 1999 and reduce financial
covenants.
During the second quarter of 1994 the Company increased its
quarterly dividend from $0.025 to $0.05 per share. Total
common stock dividends paid for the first nine months of 1994
were $17.2 million compared to $10.3 million for the comparable
period of 1993.
The Company's future results will be impacted by such factors
as the market price of gold, the Company's ability to expand
its ore reserves and the fluctuations of foreign currency
exchange rates. The Company believes that the combination of
cash, investments, available lines of credit and future cash
flows from operations will be more than sufficient to meet
normal operating requirements and anticipated dividends.
9<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis (continued)
-----------------------------------------------
GOLD PRODUCTION
The following charts detail Homestake's economic interest in
gold production by location and revenue and costs per ounce.
<TABLE>
<CAPTION>
Production
(Ounces in thousands)
Three Months Ended Nine Months Ended
Percentage September 30, September 30,
Mine Ownership (%) 1994 1993 1994 1993
---- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Homestake 100 97.4 111.6 298.0 341.3
McLaughlin 100 59.7 78.8 192.6 232.4
Round Mountain 25 26.7 24.6 86.0 67.4
Santa Fe 100 5.1 13.9 18.5 42.2
Marigold 33 6.8 7.6 21.1 23.4
Pinson 26 2.8 3.4 9.1 9.5
Dee 2.6 2.0 9.1
Mineral Hill 4.9 16.5
------ ------ ------ ------
Total United States 198.5 247.4 627.3 741.8
Williams 50 52.4 63.7 175.2 194.3
David Bell 50 24.9 28.1 72.3 78.8
Quarter Claim 25 1.2 0.7 7.1 8.2
Nickel Plate 100 19.4 17.2 65.9 52.9
Snip (1) 40 14.1 15.1 39.3 46.9
Golden Bear 28.5
------ ------ ------ ------
Total Canada 112.0 124.8 359.8 409.6
Kalgoorlie,
Australia 50 84.4 87.4 260.8 246.6
El Hueso, Chile 100 14.1 13.3 42.2 54.4
Torres, Mexico 30 3.5 2.8 9.2 9.9
------ ------ ------ ------
Total Production 412.5 475.7 1,299.3 1,462.3
Minority Interest (22.6) (23.1) (66.9) (66.9)
------ ------ ------ ------
Homestake's Share 389.9 452.6 1,232.4 1,395.4
====== ====== ====== ======
</TABLE>
10<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Management's Discussion and Analysis (continued)
------------------------------------------------
<TABLE>
<CAPTION>
Cash Operating Costs
(Dollars per ounce)
Three Months Ended Nine Months Ended
Percentage September 30, September 30,
Mine Ownership (%) 1994 1993 1994 1993
---- ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C>
Homestake 100 $295 $267 $281 $259
McLaughlin 100 267 192 244 190
Round Mountain 25 216 225 189 236
Santa Fe 100 193 280 168 263
Marigold 33 227 225 216 221
Pinson 26 300 259 287 278
Dee 393 407 374
Mineral Hill 305 268
Williams 50 203 186 196 192
David Bell 50 157 146 166 158
Quarter Claim 25 261 250 160 140
Nickel Plate 100 418 329 323 312
Snip (1) 40 159 148 166 142
Golden Bear 229
Kalgoorlie 50 261 227 261 239
El Hueso,
Chile 100 353 343 370 282
Torres,
Mexico 30 204 339 274 304
Weighted Average $259 $230 $246 $229
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
Per Ounce of Gold 1994 1993 1994 1993
----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Average Realized Price $385 $376 $384 $355
Cash Operating Costs 259 230 246 229
Non-Cash Costs (2) 49 52 48 51
<FN>
(1) Production and cash costs relate to gold contained in
concentrates and recovered from dore.
(2) Includes depreciation, depletion, amortization and
reclamation costs.
</TABLE>
11<PAGE>
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Part II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
--------------------------
On October 13, 1993 Goldstake Explorations (S.D.) Inc. filed
an action in the Federal District Court of Colorado against
Homestake Mining Company of California (Homestake) and its
wholly owned subsidiary, Whitewood Development Corporation
(Whitewood). Goldstake Explorations (S.D.) Inc. v. Homestake
Mining Company of California et al., No. 93-M-2149. The
complaint alleged that Homestake and Whitewood fraudulently
induced Goldstake to enter into a joint venture agreement in
1988 between Goldstake and Whitewood with respect to the
mining of mine tailings in Whitewood Creek, near the Company's
mine in South Dakota. The complaint alleged that Homestake
and Whitewood misrepresented their intent to mine the tailings
in order to prevent Goldstake from mining the tailings. The
complaint also alleged that Whitewood breached the joint
venture agreement and duties owed to Goldstake under the joint
venture agreement in various respects, that Homestake induced
those breaches, and that Homestake and Whitewood engaged in
acts of misrepresentation during the conduct of the joint
venture's activities. Goldstake claimed unspecified
compensatory and punitive damages. The litigation has been
stayed and the issues will be arbitrated in South Dakota. The
hearing, originally scheduled for November 1994, has been
postponed and will be held at a time yet to be determined in
1995. During the second quarter of 1994 Goldstake amended its
claim to allege actual damages of $137.5 million. In the
opinion of the Company, the claim is without merit and the
Company is vigorously defending.
Item 5. Other Information
-------------------------
The Company appointed Jack E. Thompson as President and Chief
Operating Officer effective August 9, 1994. Mr. Thompson also
was named as a Director and he succeeds Peter Steen who
resigned as Director, President and Chief Operating Officer.
Item 6.
-------
(a) Exhibits Page Number
-----------
11 - Computation of Earnings Per Share 13
27 - Financial Data Schedule
(submitted only in electronic format) 14
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended September 30, 1994.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
HOMESTAKE MINING COMPANY
Date: November 9, 1994 By: /s/David W. Peat
---------------- ----------------
David W. Peat
Controller and Chief
Accounting Officer
12<PAGE>
EXHIBIT 11
HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Computation of Earnings Per Share (unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY:
Earnings:
Net income $10,849 $22,739 $68,018 $39,594
Less Homestake Canada
Inc. dividends on
Series 1 second
preference shares (116) (885)
------- ------- ------- -------
Net income applicable to
primary earnings per
share calculation $10,849 $22,623 $68,018 $38,709
======= ======= ======= =======
Weighted average number
of shares outstanding 137,742 137,191 137,717 136,959
======= ======= ======= =======
Net income per share
- primary $ 0.08 $ 0.16 $ 0.49 $ 0.28
======= ======= ======= =======
FULLY DILUTED:
Earnings:
Net income $10,849 $22,739 $68,018 $39,594
Add: Interest relating
to 5.5% convertible
subordinated
notes, net of tax 1,643 1,693 4,875 1,797
Amortization of
issuance costs
related to 5.5%
convertible subor-
dinated notes,
net of tax 111 112 331 122
Less Homestake Canada
Inc. dividends on
Series 1 second
preference shares (116) (885)
------- ------- ------- -------
Net income applicable
to fully diluted
earnings per share
calculation $12,603 $24,428 $73,224 $40,628
======= ======= ======= =======
Weighted average number
of shares outstanding:
Common shares 137,742 137,191 137,717 136,959
Additional shares
related to conversion
of 5.5% convertible
subordinated notes 6,505 6,505 6,505 2,361
-------- ------- ------- --------
144,247 143,696 144,222 139,320
======== ======= ======= ========
Net income per share
- fully diluted (a) $ 0.09 $ 0.17 $ 0.51 $ 0.29
======== ======= ======= ========
<FN>
(a) This calculation is submitted in accordance with Regulation S-K
item 601(b)(11) although it is contrary to paragraph 40 of APB
Opinion No. 15 because it produces an anti-dilutive result.
</TABLE>
13<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet at September 30, 1994 and the related
condensed statement of consolidated income for the nine months ended September
30, 1994 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 121,284
<SECURITIES> 80,431
<RECEIVABLES> 17,337
<ALLOWANCES> 0
<INVENTORY> 78,890
<CURRENT-ASSETS> 353,605
<PP&E> 1,577,306
<DEPRECIATION> 759,717
<TOTAL-ASSETS> 1,216,504
<CURRENT-LIABILITIES> 93,601
<BONDS> 185,000
<COMMON> 137,762
0
0
<OTHER-SE> 446,339
<TOTAL-LIABILITY-AND-EQUITY> 1,216,504
<SALES> 497,554
<TOTAL-REVENUES> 541,472
<CGS> 388,002<F1>
<TOTAL-COSTS> 415,870<F2>
<OTHER-EXPENSES> 21,098<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,872
<INCOME-PRETAX> 96,632
<INCOME-TAX> 23,333
<INCOME-CONTINUING> 68,018
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 68,018
<EPS-PRIMARY> 0.49
<EPS-DILUTED> 0.51
<FN>
<F1>Includes Production costs and Depreciation, depletion and amortization from
Condensed Statement of Consolidated Income.
<F2>Includes Production costs and Depreciation, depletion and amortization and
Administrative and general expense from Condensed Statement of Consolidated
Income.
<F3>Includes Exploration expense and Other expense from Condensed Statement of
Consolidated Income.
</FN>
</TABLE>
