Brian Christie of Canaccord:"where's the beef?" on Goldcorp
"Comment: Goldcorp exploration update - In a much anticipated release of exploration results, Goldcorp managed to overwhelm retail investors and underwhelm the rest of the street. Although the results covered several target areas at the Red Lake mine, the market place was focusing on the results from two holes drilled to test the deep extension of the High Grade Zone (HGZ). Although the company had reported intersecting the HGZ at depth, they failed to make it clear in the press release that the intersections were extremely narrow - the best intersection was only 7.34 opt gold over 2.8 feet true width. In the past, we have expressed concerns that the HGZ would eventually die out, and that the deep extensions of the zone might have unfavourable economics. Given the narrowness of these recent intersections, our concerns appear to be warranted. There is no doubt that the Red Lake mine will continue to be a strong performer over the next few years, but we believe that economic potential of the Higher Grade Zone at depth is starting to look more questionable. Given that the growth prospects have somewhat dimmed, we recommend a switch into Meridian, IAMGOLD or Agnico-Eagle. We continue to rate the stock a MARKET PERFORM with a C$17.00 target price."
It seems a lot of juniors are re-discoverying the Red Lake for exploration play because of the success of Goldcorp. This probably will not temper their enthusiasm for the time being while gold price remains strong.
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