UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report: January 27, 1998
HOMESTAKE MINING COMPANY
(Exact name of Registrant as specified in its charter)
Delaware 1-8736 94-2934609
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation)
650 California Street, San Francisco, California 94108-2788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 981-8150
http://www.homestake.com
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Item 5. Other Events.
1. Restructuring of the Homestake Mine.
On January 26, 1998, the Registrant announced a major restructuring of
operations at the Homestake Mine in Lead, South Dakota. Due to increasing
production costs and the low gold price, the Company will implement a new
operating plan to reduce costs. The Company will suspend underground mining
while it completes the final details of the new operating plan and readies the
underground mine to begin operating on the restructured basis. The Company's
press release with respect to the restructuring of operations at the mine is
included as Exhibit 99.13 to this Form 8-K Report.
2. Announcement of Special Meeting of Stockholders.
A special meeting of stockholders has been set for Thursday, April 23, 1998. The
record date is March 10, 1998. At that meeting, shareholders will be asked to
approve issuance of Homestake Mining Company Common Stock to acquire Plutonic
Resources Limited, an Australian gold producer.
3. Announcement of Annual Meeting of Stockholders.
The annual meeting of stockholders has been set for Friday, July 24, 1998. The
record date for the annual meeting has not yet been established.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 99.13 Press Release dated January 26, 1998 announcing the
restructuring of operations at the Homestake Mine in Lead,
South Dakota.
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SIGNATURES
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.
Dated: January 27, 1998
HOMESTAKE MINING COMPANY
(Registrant)
By: /s/ David W. Peat
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David W. Peat
Vice President and Controller
EXHIBIT 99.13
Contact:
Gene G. Elam Michael A. Steeves
Vice President, Finance Director, Investor Relations
Chief Financial Officer 415-983-8169
415-981-8150
HOMESTAKE ANNOUNCES MAJOR RESTRUCTURING OF OPERATIONS
AT THE HOMESTAKE MINE IN LEAD, SOUTH DAKOTA
San Francisco, CA, January 26, 1998 -- Homestake Mining Company (NYSE:HM)
announced today that in response to increasing production costs and the low gold
price, it will implement a major restructuring of operations at the Homestake
gold mine in Lead, South Dakota. Homestake will implement a new operating plan
to reduce costs significantly and to position the mine to continue operating for
many years to come. The plan will require a substantial reduction in annual
production, a major reduction in the levels of employment and a complete
reorganization of the methods of operation. To most effectively implement the
new operating plan, the Company will suspend underground mining while it
completes the final details of the new operating plan and readies the
underground mine to begin operating on the restructured basis. During the
shutdown period, operations at the mill will be reduced to a level sufficient to
process ore from the Open Cut, which will continue to operate during the planned
shutdown period.
Upon completion of the restructuring, Homestake expects the total cash cost
for the underground mine will decline from the current cost of approximately
$335 per ounce to approximately $280 per ounce. Production is expected to be
reduced to a rate of approximately 150,000 to 180,000 ounces per year by the
beginning of 1999. To achieve the new operating plan, Homestake expects to
invest $20 to $30 million by the end of 1999. The new operating plan also will
involve closing parts of the mine and concentrating on substantially fewer
production levels in order to reduce continuing infrastructure and operating
costs. The Company is confident that the revised operating plan will
significantly increase net cash flow from the mine compared
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with a continuation of the existing operating mode. Adoption of the plan will
not have any adverse impact on Homestake's commitment to operating safely and in
an environmentally responsible manner. Before taking into account the recently
announced combination with Plutonic Resources Limited, the restructuring of
Homestake mine operations is expected to reduce the Company's weighted average
cash costs by approximately $8 per ounce by the end of 1999.
Jack E. Thompson, President and Chief Executive Officer of the Company,
said: "We understand the impact that a suspension of operations will have on our
employees and we will work closely with them to address their concerns. At the
same time, the mine cannot continue to operate at a substantial loss, and the
alternative to restructuring is to close the mine completely. That would not
benefit our stockholders, our employees or the community. We are confident that
our employees will work with us to implement the new operating plan that can
preserve as many jobs as possible while providing a continuing benefit to our
stockholders."
Homestake is now in the process of evaluating ore reserves and mineralized
material at the mine in light of the new operating plan. Preliminary estimates
are that the new operating plan will result in a decline of 1.5 million ounces
in the mine's proven and probable reserves from the 4.6 million ounces reported
at the end of 1996 (before taking account of 1997 production). Mineralized
material also will be reduced in light of changed circumstances.
Homestake Mining Company is an international gold mining company with
substantial operations and exploration in the United States, Canada and
Australia. Homestake also has active exploration programs in Latin America, and
development and/or evaluation projects in Chile and Bulgaria. It has received
numerous industry environmental and safety awards for its responsible
environmental health and safety stewardships.
Certain statements contained in this press release that are not statements of
historical facts are "forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are based on
beliefs of management, as well as assumptions made by and information currently
available to management. Forward- looking statements include those preceded by
the words "believe," "estimate," "expect," "intend," "will," and similar
expressions, and include reserve estimates of future production, costs per
ounce, commencement of operations and
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cost savings. Forward-looking statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially from expected
results are discussed below. Those listed are not exclusive.
Reserve estimation is an interpretive process based on drilling results and past
experience as well as estimates of ore characteristics and mining dilution,
prices, costs of mining and processing, capital expenditures and many other
factors. Actual quality and characteristics of ore deposits cannot be known
until ore is actually mined. Reserves change over time to reflect actual
experience. Grades of ore processed at any time also may vary from reserve
estimates due to geologic variations within areas mined. Production may vary
from estimates because of changes in reserves, variation in ore mined from
estimated grade and metallurgical characteristics, unexpected ground conditions,
mining dilution, labor actions, and government restrictions. Cash costs may vary
due to changes from reserve and production estimates, unexpected mining
conditions, and changes in estimated costs of equipment, supplies, utilities,
labor costs and exchange rates. Noncash cost estimates, based on total capital
costs and reserve estimates, change based on actual amounts of unamortized
capital, changes in estimates of final reclamation, and changes in reserves.
Reclamation and remediation cost estimates are based on existing and expected
legal requirements, past experience, cost estimates by the Company and others,
and expectations regarding government action and time for government agencies to
act, all of which change over time and require periodic reevaluation. Capital
cost estimates are based on operating experience, expected production, estimates
by and contract terms with third-party suppliers, expected legal requirements,
feasibility reports by Company personnel and others, and other factors. Factors
involved in estimated time for completion of projects include the Company's
experience in completing capital projects, estimates by and contract terms with
contractors, engineers, suppliers and others involved in design and construction
of projects, and estimated time for the government to process applications,
issue permits and take other actions. Changes in any factor may cause costs and
time for completion to vary significantly from estimates.
Pressrel\LEAD.98
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