Beautifully engraved Stock certificate from the Homestake Mining Comapany
issued no later than 1948 for shares of Common Stock. This mining certificate has an ornate border around it with a classic vignette of two indians overlooking a hillside with mountains, a river, train, bridge and ship in the background.
Homestake began mining operations in 1877. In 1879, Homestake common stock was listed on the
New York Stock Exchange where it has traded continuously since listing. The Company's stock also is
traded on the Australian Stock Exchange, and the Swiss Stock Exchanges in Basel, Geneva and Zurich
and on the over-the-counter markets in Frankfurt, Germany and Paris, France. Homestake owns
50.6% of Prime Resources Group Inc. which is traded on the Toronto Stock Exchange and the
Vancouver Stock Exchange in Canada.
The Company was founded to develop the Homestake mine discovered in the Black Hills of the
Dakota Territory in 1876. The Homestake Black Hills, South Dakota mine has produced more than 39
million ounces since 1876 and is the Company's largest producer. Operations consist of an 8,000-foot
deep underground mine, an open-pit mine, a mill and a gold refinery. Ore zones have become lower
grade and more fragmented at depth but this has been largely offset by continued success in reducing
unit costs. As of December 31, 1996, proven and probable gold reserves were 4.7 million ounces,
sufficient for another 10 years of mining at current rates of production.
It was a gold mining company until its diversification into uranium mining and production in the 1950s,
its development of lead and zinc mines in the 1960s and the acquisition of oil and gas properties in the
1980s. Following years of profitable operation, the Company sold its oil and gas interests in 1989,
closed its last remaining uranium mine in the same year and sold its interest in the lead and zinc
business in 1990. In 1989, Homestake joined with two partners in the development of a major sulphur
discovery, Main Pass 299, in the Gulf of Mexico.
In 1975, the Company made its initial investment in the Kalgoorlie gold district of Western Australia.
In 1987, Homestake sold 20% of the stock of Homestake Gold of Australia ("HGAL") to the public.
Subsequently, HGAL acquired a 50% interest in certain additional properties in the famous Kalgoorlie
mining district known as the "Golden Mile." In 1996, Homestake acquired the 18% of HGAL that it
did not own at that time for 8.5 million shares of Homestake shares valued at $142 million and
approximately $23 million in cash.
In 1992, Homestake acquired International Corona Corporation, a large Canadian gold producer, for
37.2 million Homestake shares having a value of approximately $480 million. As a result of the
acquisition, Homestake added 600,000 ounces to its yearly production of gold and increased its gold
reserves by more than 5.4 million ounces. In addition, through Prime Resources Group Inc ("Prime")
the Company acquired the high-grade Eskay Creek deposit in British Columbia. The Eskay Creek
mine currently is Homestake’s lowest cost producer.
Homestake's annual gold production is expected to be approximately 1.9 million ounces in 1997.
Operations in the United States are expected to contribute almost 40% of the Company’s production,
primarily from the Homestake, McLaughlin and Round Mountain mines. Gold production from Canada
also is expected to be about 40% of the Company's total, principally from the Williams, David Bell,
Eskay Creek and Snip mines. The remaining 20% is expected to come from the Kalgoorlie operations
in Western Australia.
During the last several years, Homestake has placed great emphasis on reducing its cash production
costs. In 1996, total cash costs were $248 per ounce compared to $257 per ounce in the preceding year.
Total production costs for the Company were $306 per ounce during 1996 excluding $19 per ounce for
administrative expenses and $23 per ounce for exploration expenses.