This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Goldcorp's Growth Plan

DENVER ( TheStreet ) -- Goldcorp (GG) is one of the biggest gold producers in the world but its shares aren't gaining traction this year despite a 17% rally in gold prices .

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) 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 will see very significant accretion.

Was this a desperate move at all to rejuvenate your resources?

Jeannes: Goldcorp has the best growth profile of any of the senior companies. Before the Andean acquisition we were growing 50% over the next five years to 3.7 million ounces. We have the lowest cash-cost profile so this was an opportunity we didn't need but makes us a better company.

Now you brought up growth. On your Web site it says that your growth strategy is organic growth but clearly you are now in acquisition mode. So are you changing your strategy?

Jeannes: No, and we've always had what I think is an appropriate mix between growing organically, meaning exploration at the sites we already own and then adding new projects through acquisitions. And I think it's been proven in our industry ... that you can't do just one or the other.

Companies that try to grow only through exploration have been unsuccessful at doing that and at the same time you shouldn't just be serial acquirers. Try to find assets that grow over time; that's a good mix.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs