Goldcorp Sees Big Potential For Red Lake Mine

[Libertarian_Guard]

http://biz.yahoo.com/djus/030923/1816001362_1.html

Tuesday September 23, 6:16 pm ET
By Tom Locke, Of DOW JONES NEWSWIRES


DENVER (Dow Jones)--Goldcorp Inc.'s new drilling at its Red Lake Mine in Ontario expands the dimension of a deeper high-grade zone that could approach the significance of a huge high-grade zone above it, Chief Executive Robert McEwen told Dow Jones Newswires Tuesday

Further exploratory drilling will determine what the potential of the lower deposit really is, but "the potential could be as much as another 3.8 million ounces of gold," McEwen said following his presentation here at Denver Gold Forum 2003, sponsored by the Denver Gold Group.

In his presentation, McEwen also stressed the importance of a $94 million, 7, 200-foot second shaft at Red Lake that will increase gold production there 40%, from about 500,000 ounces a year to about 700,000. It also will lower cash costs per ounce to $70 from $80, and provide some insurance as another access point should anything happen with the existing shaft.

The first full year of production after shaft completion is expected to be 2007. After the shaft is built, the company will be able to exploit lower-grade ore as well as high-grade ore, and it will expand production from 650 tons of ore a day to 1,000, with the capability of expanding to 2,500 tons a day.

One company goal is to expand to 1 million ounces of gold production a year, and it is looking at potential acquisitions in North America, South America and Europe to help it reach that goal, said McEwen. He said Goldcorp unsuccessfully tried for two years to buy Placer Dome Inc.'s Campbell Mine next to the Red Lake Mine.

"Our approach to (mergers and acquisitions) is to wait for the opportunity," said McEwen, and the company wants to be ready to take advantage of it when it arises.

As of June 30, Goldcorp had considerable acquisition ammunition: $200 million in cash, $68 million in marketable securities and $85 million in gold bullion.

That 245,000 ounces of gold bullion, or 25% more than that of the Bank of Canada, is a result of Goldcorp's retaining some of its gold production in anticipation of a rise in gold prices. McEwen said the price of gold is "going to test the $800 mark" over the next six to eight years. That's more than twice its current level near $390 an ounce.

"We're into a generational change in the marketplace," he said. Investors are concerned about preserving wealth in an environment of a weaker dollar, underfunded pension plans and governments incurring debts to keep economies propped up, and they are looking to gold as an investment to offset these factors, he said.