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Chuck Jeannes shares his thoughts on the Company’s 2008 results, details his vision, strategy and goals for Goldcorp and comments on how he will lead a world-class gold mining company into the future.
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Goldcorp finished the year with record gold production in the fourth quarter of 2008. How did the Company perform for the year? |
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A focus on operational excellence throughout the organization resulted in a strong finish to 2008, as we produced a record 692,000 ounces of gold in the fourth quarter. For the year, we experienced challenges in pursuit of our gold production targets – primarily due to unanticipated production issues at the Red Lake and Los Filos mines – but we were pleased to meet our expectations for total cash costs. Gold produced in 2008 totaled 2.3 million ounces at total cash costs of $305 per ounce – the lowest cash cost among the senior gold companies. A healthy realized gold price of $868 per ounce led to a 10% increase in revenues to $2.42 billion. Overall, we certainly ended the year stronger than when it began.
We are financially stronger, thanks not only to accelerating cash flows from our mines in a rising gold price environment, but also as a result of the sale of our 48% interest in Silver Wheaton for approximately $1.5 billion. This enabled us to fund the bulk of our cornerstone growth project, Peñasquito in Zacatecas, Mexico. Despite challenging economic conditions, we maintained our outstanding balance sheet, ending the year with zero debt, $260 million in cash and an undrawn $1.5 billion credit facility. We also returned $128.7 million in cash to our stockholders through a monthly dividend. As always, our gold production remains 100% unhedged, providing our shareholders full exposure to current and future gold-price movements.
We are also stronger from a reserves standpoint, the backbone of any mining company. We invested $148 million in exploration in 2008 and our exploration team delivered a very solid return on that investment, growing our total gold reserves by growing our total reserves by 7% after accounting for mined ounces during the year, for a total finding cost of less than $15 per ounce. This was our fifth straight year of gold reserves growth, and it is important to note that we replaced mined reserves organically in 2008, without reliance on acquisitions.
We also made a key acquisition in 2008 – the Bruce Channel discovery, acquired from Gold Eagle Mines Ltd. This acquisition secured full control of eight kilometres of strike length in the heart of the world’s richest high-grade gold district and is essential to our long-term growth plans at Red Lake. Development of this strategically important zone can now move forward with our adjoining assets as a single, comprehensive project, sharing mine infrastructure, ore processing facilities and human talent with Red Lake, thus minimizing capital and operating costs and maximizing long-term shareholder value.
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Gold produced in 2008 totaled 2.3 million ounces at
total cash costs of $305 per ounce – the lowest cash cost
among the senior gold companies.
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