After 50 years of operation, Goldcorp's flagship Red Lake mine shows no signs of fading as General Manager Dan Gagnon told analysts and investors Wednesday that his goal is be make the mine a million ounce producer annually.
When Gagnon revealed the possibility that the addition of another high-grade zone could make Red Lake a 1.4 million ounce annual producer, even Goldcorp President and CEO Kevin McArthur was taken by surprise. Nevertheless, Gagnon offered evidence that his quest was no mere pipe dream.
During a presentation at Goldcorp's annual investors' day in Toronto, Gagnon said the integration of Barrick's former Campbell mine with nearby Red Lake opened up tremendous exploration opportunity. The acquisition gave Goldcorp the opportunity to do a lot of development, accelerate development, ensure that Red Lake kept on its course of being a long-lived mine and also a low-cost producer, he explained.
Gagnon said the company has embarked on a $20 million exploration program in five areas of the integrated mines with new high grade zones discovered and opened the possibility of adding an open pit mine to the two current underground gold mines. Everywhere we're drilling, we're finding gold, he declared.
McArthur explained that while a considerable amount of high-grade ore was pulled out of the mine in the past when Goldcorp was a single-mine company, left behind was a considerable amount of low-grade ore yet to be mined. McArthur would like to develop those low-grade ores and eventually construct a big mill to get us where we want to be, which he estimated to be in the range of 1.2 million to 1.3 million ounces of annual gold production.
Currently, Red Lake and Campbell combined offer 5.2 million ounces of proven and probable reserves.
Meanwhile, George Burns, Goldcorp Vice President, Canada and the United States, who oversees the Éléonore project in Quebec, said, We remain confident that this will be a mine. He explained that a power line will be in place by 2010, and that a collaboration agreement is in effect with the three First Nations Cree communities that would be impacted by Éléonore. The Éléonore project is located in the Ell Lake area, in the eastern part of the Opinaca reservoir of the James Bay region. The project is located 320 km north of the town of Mattagami.
Burns said Goldcorp is considering a 2011 start-up and 2012 as the first year of production as permitting is progressing, along with engineering.
Despite the vociferous opposition of some local environmental and social NGOs, Goldcorp Vice President Central and South America, Tim Miller imparted mainly upbeat information concerning a new Guatemalan government that was supportive of mining, along with an emerging turnaround in the attitude of the Honduran government. He added that the Cerro Blanco property in southwest Guatemala is now being developed.
While the stand-off over newly reinstated mining export taxes drags on in Argentina, Miller said Xstrata, the operator of the Alumbrera copper and gold joint venture, has reported progress in its talks with the Argentine government. He added that a positive resolution is anticipated in the not too distant future.
Miller also revealed that Charles Jeannes, Executive Vice President, Corporate Development, said Goldcorp has a goal of achieving a 54% growth to 4 million ounces of yearly gold production by 2012. He reported a $1.3 billion cash balance, no debt, and access to a $1.5 billion revolving credit facility as of March 31, 2008.