Size isn't everything - Goldcorp CEO

Annual gold production could double by 2018 but the group believes there is a size, beyond which one doesn't want to grow

Author: Cameron French (Reuters)
Posted: Tuesday , 09 Mar 2010

NEW YORK (Reuters) -

Goldcorp's (G.TO) annual gold production could more than double to 5 million ounces by 2018 at its current growth rate, but the company is cool to expansion beyond that, its chief executive said on Monday.

Goldcorp, the world's No. 2 gold producer by market value, expects its annual mined output to rise from 2.4 million ounces last year to 3.8 million ounces in 2014, as it opens three new mines in Mexico, Canada and the Dominican Republic.

Beyond that, the company owns five advanced-stage projects in the Americas that could keep pushing production higher, Goldcorp CEO Charles Jeannes said at the Reuters Global Mining and Steel summit in New York

"At that rate of growth, we don't get to 5 million ounces until 2017-18. So, I'm comfortable that we can continue to grow up until 5 million ounces," he said.

Barrick Gold (ABX.TO), the world's top producer, expects to produce as much as 8 million ounces of gold this year, while Newmont Mining (NEM.N) expects to produce up to 5.5 million ounces.

"I think we have had the benefit of seeing through companies like Barrick and Newmont that there is a size beyond which you don't want to grow, because once you get there it's very difficult to continue growing your production," said Jeannes.

He said he expects gold prices to rise through $1,500 an ounce in the medium to long term, but said near-term prospects were tougher to predict.

"I just think there's a lot of uncertainty, so I wouldn't be surprised to see gold move in a large trading range over the next while. (But) I would be surprised to see the gold price drop below 1,000 and stay there for any length of time," he said.

Gold was trading around $1,120 an ounce on Monday.

Jeannes said Goldcorp, which recently acquired Canplats Resources and bought Xstrata's (XTA.L) 70 percent stake in the El Morro copper-gold project in Chile, doesn't have a sense of urgency about adding more assets, but will be opportunistic if it sees something that fits its criteria.