Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Gold related post (GG) ***

Hi Dietmar,
Your last post indicated an interest in Coldcorp.


Goldcorp likes prospects in Mexico

By Shawn McCarthy

Wednesday, May 25, 2005

NEW YORK -- Goldcorp Inc. is targeting Mexico's underdeveloped gold fields, including a project controlled by Teck Cominco Ltd., as it looks to double its gold production through internal growth and acquisitions, chief executive officer Ian Telfer said yesterday.

Mr. Telfer was on Wall Street to market his newly merged firm to investment managers, who have cooled on gold since the bullion price has sagged and the U.S. dollar strengthened in recent months.

In the morning, he rang the opening bell at the New York Stock Exchange to mark the company's 10th anniversary on the exchange, a ceremonial honour that tends to generate a round of coverage in the financial media like Bloomberg television and the CNBC cable channel.

"Our strategy going forward is to continue to do acquisitions, grow the company to a little more than two million ounces a year [from the current 1.2 million ounces of production] and do that in North and South America," he said in an interview at the exchange.

Mr. Telfer took over as CEO last month when Goldcorp formally completed its controversial acquisition of Wheaton River Minerals Ltd., where he had been chairman and CEO.

He said Goldcorp has a $500-million (U.S.) cash hoard and is negotiating a $500-million line of credit, both of which will be used to make acquisitions. He said he is looking for two deals that would add roughly 250,000 ounces of production a year.

For a company that produces more than one million ounces of gold, Mr. Telfer is relatively cheerful about the slide in the price of gold bullion, which has dropped to $418 an ounce from nearly $460 at the end of 2004.

Goldcorp plans to finance its acquisitions with cash, so the decline in gold prices -- and the resulting drop in the share prices of producers -- could mean a bargain for the Vancouver-based firm.

"This depressed gold price or slightly lower gold price is presenting opportunities to us that weren't around six months ago," he said. Goldcorp already has three properties in Mexico, including two adjacent mines that are being merged into one operation that will produce 300,000 ounces of gold per year at a cost of $200 an ounce.

It is negotiating with Teck to buy its 79-per-cent interest in the El Limon project, which contains an estimated three million ounces of gold reserve and could produce more than 200,000 ounces a year. Goldcorp already owns the other 21-per-cent interest.

"We'd be very interested in acquiring their interest and putting that mine into production if we got that opportunity," Mr. Telfer said. While Mexico is its main focus, the company is also looking for properties in Argentina, Brazil and Chile, where it also has mines.

Mexico, which is already the world's largest silver producer, is eager to become a major source of gold. The Mexican undersecretary for mines, Salvador Ortiz-Vertiz, was in New York this week and shared a podium with Mr. Telfer on Monday night from which they extolled the attractiveness of the Mexican investment climate.

Already, some 125 Canadian mining companies are operating in Mexico but Mr. Ortiz-Vertiz said much of the country's southern half remains virtually unexplored.

In contrast, Canada has been heavily explored and there is little optimism that prospectors will make major new discoveries. As a result, Goldcorp does not expect to make acquisitions at home.

"The problem for someone like ourselves in Canada is that there just are no identifiable, large, undeveloped deposits, and the other good gold mines in Canada are owned by the majors and they are not for sale," he said.

Goldcorp shares rose 54 cents yesterday to close at $16.78 on the Toronto Stock Exchange.

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050525/RGOLDCORP25/TPBusiness/TopSt...