Photo
Business Update

Reuters business newsletter, your daily business coverage.

Subscribe

Goldcorp sees higher gold prices

Mon Mar 10, 2008 2:35pm EDT

Reporter's Notebook

[-] Text [+]

By Robert Melnbardis

NEW YORK (Reuters) - Goldcorp Inc (G.TO: Quote, Profile, Research, Stock Buzz) (GG.N: Quote, Profile, Research, Stock Buzz) expects the price of gold to top $1,000 an ounce and stay there for a long time, a development that will allow the company to improve operating margins, Chief Executive Kevin McArthur said on Monday.

In a wide-ranging interview at the Reuters Global Mining Summit, McArthur, who is also president of the Canadian gold producer, said he thinks the price of gold, which was at $973 an ounce on Monday, is not "anywhere near a bubble."

"We are not replacing the reserves that we're mining, and yet demand continues to grow worldwide. We're going to run out of gold," he said of the global gold industry.

Higher gold prices will be the way to greater world production of the precious metal, he said.

For its part, Goldcorp, which is unhedged on gold, plans to add to reserves and boost production by 50 percent over the next five years, all while keeping a tight rein on costs.

Capital expenditures are forecast at $1.4 billion this year and $1.5 billion next year.

McArthur said he did not expect the company to make large acquisitions in the near future.

"Almost our entire focus is on brownfield exploration right now. These are properties we gathered up over the last seven years, big properties, that are underexplored," he said.

One such property is Goldcorp's flagship Red Lake mine in the Canadian province of Ontario.

"We're finding exciting drill holes there. We expect to operate there for decades to come," he said.

Goldcorp plans to spend $150 million on exploration this year, up from $120 million last year.

The company acquired some $10 billion of assets in 2006, including its takeover of Glamis Gold, the Eleonore gold deposit in northern Quebec, and Canadian assets from Place Dome.

Goldcorp has also sold non-core assets, including its 48 percent stake in Silver Wheaton Corp (SLW.TO: Quote, Profile, Research, Stock Buzz) last month for C$1.6 billion.

The moves have put the company's balance sheet in good shape, McArthur said.

"We've got a pretty good war chest anyway," McArthur said, referring to the Silver Wheaton windfall and a $1.5 billion revolving credit facility.  Continued...

 
India Investment Nov 23 - 25, 2009 Country Summits
Global Finance Nov 16 - 19, 2009 Financial Services / Exchanges
Health Nov 09 - 12, 2009 Health
Autos Nov 02 - 4, 2009 Autos
Middle East Investment Oct 26 - 28, 2009 Country Summits

What are Summits?

Reuters Summits are your direct link to top business leaders, investors and regulators. Our journalists interview heavyweights in a particular industry, spin out hard-hitting breaking news and sharp analysis that can often move markets. If you want to understand what the insiders are thinking, look for Reuters Summits. 

 

Stay connected. Get e-mailed alerts with schedules, speaker lists, and headlines from upcoming and live Industry Summits.