Goldcorp Inc., Canada’s second-largest gold mining company, has no plans to diversify away from gold into other metals and remains focused on increasing its gold output, chief executive Chuck Jeannes said on Friday.
Mr. Jeannes, speaking at an investor day in Boston, also said Goldcorp has reviewed its plans in light of costs weighing on the mining industry and remains focused on managing those costs while increasing output.
“We have reviewed our strategy,” he said. “And we’re confident in fact that the strategy is sound, that we are on the right track and that we don’t need to change our strategic focus.”
The promise of business as usual, with a $5.5-billion five-year spending plan, caused little reaction in the market. The shares were barely changed at $33.65 on Friday morning on the Toronto Stock Exchange.
“We want to stay – primarily, certainly – a gold company,” Mr. Jeannes said, in response to a question about diversifying into copper.
“Certainly if we’re looking out there and we find something that is a significant divergence from our current strategy, which is to grow our gold production, we’d have to have a lot of discussion about that,” he said, adding he still believes there is a premium paid in the market for gold production.
Top North American mining companies that have diversified their output base have not fared well recently.
Barrick Gold Corp., the world’s largest gold miner, said last month it had booked a $3.8-billion charge to write down the value of its Lumwana copper project in Zambia, acquired as part of an unpopular $7.3-billion 2011 takeover of Equinox Minerals Ltd.
Shareholders criticized the company for increasing its exposure to copper without adding significant gold ounces.
Freeport-McMoRan Copper & Gold Inc. has been battered in the market since the company agreed late last year to buy two oil and gas firms for $9-billion, in a bid to diversify into the U.S. energy sector.
Goldcorp produces copper as a byproduct at its Alumbrera joint venture in Argentina and at the Pueblo Viejo joint venture in the Dominican Republic. The company also has significant copper reserves at its El Morro project in Chile, which has been delayed over permitting issues.
Goldcorp, which touts itself as a growth leader, is currently building three new mines and plans to boost annual gold output by some 75 per cent to up to 4.2 million ounces by 2017.
This comes as many of Goldcorp’s peers shy away from building new mines as soaring development costs and a slipping bullion price make once-promising projects far less attractive.
Goldcorp expects the Cerro Negro mine in Argentina to start production in late 2013, Eleonore in Canada is slated for late 2014 and Couchenour, also in Canada, in 2015.
The company’s $5.5-billion growth plan also includes Pueblo Viejo, which recently reached commercial production, and Camino Rojo in Mexico. It has so far spent or committed $3.5-billion of that total.