The company has a $32 billion market cap and produced 609,500 ounces of gold in the second quarter at total cash costs of $363 an ounce. Goldcorp reported adjusted earnings per share of 27 cents, 2 cents below expectations. But despite solid numbers the stock has only risen 7% year to date.
Goldcorp recently participated in the consolidation trend in the mining industry by buying Andean Resources for $3.4 billion, a company Eldorado Gold (EGO - Get Report) had been courting for years. Andean has indicated resources of 2.54 million ounces of gold, which will help Goldcorp's goal of expanding 50% in the next five years.
I sat down with CEO Chuck Jeannes at the Denver Gold Forum to see if Goldcorp's recent acquisition was a desperate move for growth.So you recently bought Andean Resources for $3.4 billion, a 35% premium. Did you overpay? Jeannes: No not at all. This is one of those once-in-a-decade kind of opportunities that comes around. It's a very high-quality deposit which in our business means extremely low cost, both capital cost and operating cost, and it's got the opportunity to grow significantly over many, many years ... so we think actually the price we paid is accretive to Goldcorp's shareholders particularly on cash flow per share ... happy about the deal. How quickly will it be accretive to your earnings? Jeannes: Once the project is built and in production which will be late 2012, so 2013, 2014, 2015 we