EXHIBIT 99.3
NEWS RELEASE
Contact:
Gene G. Elam Michael A. Steeves
Vice President, Finance and Director, Investor Relations
Chief Financial Officer (415) 983-8169
(415) 981-8150
HOMESTAKE REPORTS INTERIM RESULTS
FOLLOWING ACQUISITION OF PLUTONIC
SAN FRANCISCO, CA - June 18, 1998 - Homestake Mining Company (NYSE: HM)
today reported interim operating results for the one-month and five-month
periods ended May 31, 1998. This summary financial information is the first to
be published following the business combination with Plutonic Resources Limited
on April 30, 1998, which was accounted for as a pooling of interests. The merger
agreement between Homestake and Plutonic and pooling-of-interests accounting
require publishing of results for at least thirty days of combined operations.
Homestake recorded net losses of $9.2 million or $0.04 per share and
$34.8 million or $0.16 per share during the one-month and five-month periods
ended May 31, 1998, respectively. The month's results include $15 million of
pretax foreign exchange losses, primarily unrealized noncash mark-to-market
adjustments on the Company's foreign currency protection program. The five-month
results include $20.7 million of pretax expenses relating to the business
combination with Plutonic, $15.8 million of pretax foreign exchange losses and
$8.9 million of pretax costs associated with the restructuring of the
underground operations at the Homestake mine in South Dakota. Excluding the
effects of these significant charges, Homestake recorded income before taxes and
minority interests of $8 million and $23.9 million in the one-month and
five-month periods ended May 31, 1998, respectively.
Homestake's and Plutonic's combined operations have performed very well
during 1998, producing 230,800 ounces of gold and gold equivalent at a total
cash cost of $199 per ounce during the month of May and 1,094,900 ounces of gold
and gold equivalent at a total cash cost of $207 per ounce during the five-month
period ended May 31, 1998.
A significant portion of the Company's operating costs is denominated
in Australian and Canadian dollars. The Company's foreign currency protection
program was established to mitigate the effects of a strengthening of either of
these currencies by establishing ranges within which the United States dollar
may be exchanged for
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Australian and Canadian dollars. Australian and Canadian exchange rates have
declined significantly since the Company entered into its current foreign
exchange contracts and have caused the Company to record the noncash foreign
exchange losses described above. If these currencies remain depressed throughout
the life of the foreign currency contracts, at the time the contracts are
settled, the Company will have realized an equal and offsetting benefit through
lower reported US dollar operating costs.
During June 1998, Homestake closed out one million ounces of the
Australian dollar-denominated forward gold contracts which Plutonic had entered
into prior to its acquisition by Homestake. The pretax gain of $5 million
realized as a result of this action will be deferred and recorded in income as
the originally designated production is delivered.
Homestake Mining Company is an international gold mining company with
substantial operations and exploration in the United States, Australia and
Canada. Homestake also has active exploration programs in Latin America and in
Eastern Europe, and development and/or evaluation projects in Chile and
Bulgaria. It has received numerous industry environmental and safety awards for
its responsible environmental, health and safety stewardships.
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Summarized Financial Results (Unaudited)
($ in millions, except per share amounts)
One Month Five Months
Ended Ended
May 31, 1998 May 31, 1998
------------ ------------
Revenues $ 81.2 $ 351.7
Expenses $ 88.5 $ 373.2
Loss before taxes and minority interests $ (7.3) $ (21.5)
Net loss $ (9.2) $ (34.8)
Net loss per share $ (0.04) $ (0.16)
Average shares used in the computation (millions) 211.1 210.8
Components of Loss Before Taxes and Minority Interests (Unaudited)
($ in millions - pretax)
One Month Five Months
Ended Ended
May 31, 1998 May 31, 1998
------------ ------------
Income before significant charges, taxes
and minority interests $ 8.0 $ 23.9
Significant charges:
Business combination costs (.3) (20.7)
Homestake mine restructuring costs - (8.9)
Foreign exchange losses (15.0) (15.8)
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Total significant charges (15.3) (45.4)
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Loss before taxes and minority interests $ (7.3) $ (21.5)
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HOMESTAKE MINING COMPANY AND SUBSIDIARIES
Summarized Balance Sheet (Unaudited)
($ in millions)
May 31, 1998
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Current assets $ 445.7
Noncurrent assets 1,092.8
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Total assets $ 1,538.5
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Current liabilities $ 151.1
Long-term liabilities 511.6
Deferred taxes 142.6
Minority interests 114.1
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919.4
Shareholders' equity 619.1
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Total liabilities and shareholders' equity $ 1,538.5
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