2010 corporate update december


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2010 corporate update december

  1. 1. 1 December 2010 CORPORATE UPDATE 1
  2. 2. 2 Forward-Looking Statements This presentation contains “forward-looking statements”, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of Goldcorp Inc. (“Goldcorp”). Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver, copper, lead and zinc, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, hedging practices, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, timing and possible outcome of pending litigation, title disputes or claims and limitations on insurance coverage.  Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”.  Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Goldcorp to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions; risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold, silver, copper, lead and zinc; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes; delays in obtaining governmental approvals or financing or in the completion of development or construction activities and other risks of the mining industry, as well as those factors discussed in the section entitled “Description of the Business – Risk Factors” in Goldcorp’s annual information form for the year ended December 31, 2009 available at www.sedar.com.  Although Goldcorp has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.  There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.  Accordingly, readers should not place undue reliance on forward-looking statements.  Goldcorp does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws. 2
  3. 3. SUSTAINABLE PROSPERITY GrowING: Growth Leader Efficient: Low-Cost Producer Strong: Outstanding Balance Sheet Stable: Low Political Risk Responsible: focus on all stakeholders 3 3
  4. 4. 4 STRONG CASH MARGINS $1,200/oz $600/oz $0/oz 2008 2005 2007 2009 2006 2004 2003 YTD By-Product Cash Costs Cash Margin 4
  5. 5. 5 INCREASING VALUE: EARNINGS AND CASHFLOW $1,480M $1,500M $1,270M $866M $791M $651M $750M $588M $440M $397M $0M 2007 2008 2010* 2009 Adjusted Net Earnings Operating Cash Flow After WC Changes * Pro-forma based on YTD figures 5
  6. 6. 6 GOLDCORP: THE GROWTH CONTINUES 3.7 Moz $400 4 Production Growth: 20% CAGR $300 Production (Moz) $200 2 Cash Cost/oz $100 $0 0 2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2013* 2014* Cash costs: 2010-2014 est. Au actual production Au est. production (reflects the effect of San Dimas disposition) 6
  7. 7. Camino Rojo El Morro ADVANCED STAGE Éléonore Noche Buena Cerro Blanco Peñasquito Red Lake/Cochenour Pueblo Viejo 7 Growing: A ROBUST PIPELINE 3.7Moz EARLY STAGE Red Lake O/P Peñasquito U/G Hollinger 2014 2.4 Moz 2009 7
  8. 8. 8 ANDEAN TRANSACTION – PORTFOLIO enHancement Transaction Details Total consideration: C$3.6 billion 0.14 common share of Goldcorp or cash payment of C$6.50 per Andean share or a combination at election of shareholder up to C$1 billion in cash consideration Project Overview Cerro Negro gold project - advanced stage high grade vein system Located in Santa Cruz province of Argentina Resources: 2.5Moz Au and 23.6Moz Ag (Indicated); 0.5Moz Au and 3.1Moz Ag (Inferred) Rationale Consistent with strategy – large, high quality asset in stable jurisdiction Significant exploration upside High grade, low cost production = growing cash flow 8
  9. 9. 9 CERRO NEGRO DEVELOPMENT & EXPLORATION Robust feasibility study results released in July 2010 Development underway with final permits anticipated in Q4 2010 and commercial production in 2012 Significant potential to expand resources, mine life, and production rates Young deposit – 1st prospected in the 1990’s and high grade Eureka vein only discovered in 2007 80,000 m of drilling in calendar 2010 Alumbrera (37.5%) El Morro (70%) Cerro Negro (100% owned by Andean) Santa Cruz Province, Argentina 9
  10. 10. Third quarter 2010 results *before changes in WC 10 10
  11. 11. 11 Strong: Outstanding Balance Sheet (as of SEPT. 30, 2010) Cash $732M $1.7B* Marketable securities & investments Convertible senior notes $862.5M Available debt facility $1.5B Average annual cash flow over next 5 years ~$2.0B** Debt : Total capitalization < 0.04: 1 Excellent liquidity *Market value as of Sept. 30/10 **Price Assumptions: 2011 – 2014: Au - $1100/oz; Ag - $17.00/oz; Cu - $2.75/lb; Zn - $0.80/lb; Pb - $0.80/lb; Oil - $85/bbl 11
  12. 12. 12 Delivering Shareholder Value Earnings/Share (1) (US$/share) Cash Flow/Share (2) (US$/share) Reserves/Share (3) (ounces/1,000 shares) Resources/Share (3) (ounces/1,000 shares) +196% +204% +253% +346% 183 99 $1.61 $0.80 $0.53 $0.27 28 41 2004 2009 2004 2009 2004 2009 2004 2009 (1) Adjusted earnings per share (2009 reported earnings per share is $0.33 per share) (2) Cash flow before changes in working capital (3) Reserves and resources for gold and silver (silver converted at 55x ratio) 12
  13. 13. 13 CASHFLOW PER SHARE GROWTH (10E - 12E) 60% 50% 40% 30% 20% 10% 0% Newmont Barrick Kinross Goldcorp Agnico Source: Based on industry analyst consensus 13
  14. 14. 14 STABLE: LOW POLITICAL RISK PROFILE Au reserves (Moz) 2010E Au(oz) CANADA Red Lake 3.4 675,000 Porcupine 2.8 280,000 Musselwhite 2.1 260,000 UNITED STATES Marigold (66.7%) 1.6 120,000 Wharf 0.2 65,000 MEXICO Peñasquito 17.8 180,000 Los Filos 5.7 300,000 El Sauzal 0.3 155,000 CENTRAL AND SOUTH AMERICA Marlin 2.1 290,000 Alumbrera (37.5%) 1.5 165,000 2.55 Moz 2010E GOLD PRODUCTION Focus in the Americas 14
  15. 15. 15 Peñasquito One of the world’s largestnew mines 15
  16. 16. 16 Peñasquito at a Glance 17.8million ounces gold (proven and probable)1 22-year mine life 500,000 ounces gold - average annual production2 Life of mine negativeby-product cash costs Significant satellite production opportunities Noche Buena Camino Rojo See Endnote; (2) After reaching full design capacity 16
  17. 17. 17 Peñasquito - Ramping Up Production Throughput 130,000 tonnes/day Q2/11 High-Pressure Grinding Rolls Q4/10 100,000 tonnes/day SAG Line 2 Q2/10 50,000 tonnes/day SAG Line 1 Q2/09 17
  18. 18. 18 Peñasquito Regional Targets 18
  19. 19. 19 Red Lake The world’srichestgold mine 19
  20. 20. 20 red lake at a Glance Decades of high-grade gold production; 20Mozs produced 675,000 Ounces 2010 estimated annual production Advancing HGZ at depth District optimization plans advancing: Cochenour, open pit 20
  21. 21. 21 cochenour – a major gold discovery Initial operation sized for 5 million ounces of gold $71 million investment in 2010, including scoping study Shaft rehabilitation (18’ dia) 5 km high speed tram (30 mthsconstruction) First production late 2014 U/G drilling underway 21
  22. 22. red lake district optimization #3 Shaft Surface #1 Shaft Reid Shaft Open Pit Potential North Zone DDH VG McKenzie Mine Wilmar West Granodiorite Red Lake Complex 13 L Marcus Drift Bonanza Follansbee Discovery Wilmar East Breccia Zone 2,500 ft - Western Discovery Campbell Complex Cochenour Mine Inco Zones #2 Shaft 23 L Bruce Channel West 30 L High Speed Tram 5,000 ft - Cochenour 37 L High Grade Zone Bruce Channel Party Wall Zone Deep Campbell Rahill-Bonanza Joint venture Goldcorp 100% Goldcorp 100% Goldcorp 51% 8 km 22
  23. 23. 23 Pueblo Viejo: the next growth driver 9.5 million ounces gold reserves* +25-year mine life $485 million - capital budget 2010* Q4 2011 start-up 415,000 – 450,000 ounces average annual gold production** *Goldcorp interest 40% **During first full five years of operation 23
  24. 24. 24 $145 million Total 2010 exploration investment 24
  25. 25. 25 reserve growth continues GOLD 2P RESERVES (Koz)1 ? 48,800 46,300 43,400 39,700 14,700 5,226 2004 2005 2006 2007 2009 2010 2008 Targeting 7th consecutive year of reserve growth (1) See Endnote 25
  26. 26. 26 exploration HIGHLIGHTS Red Lake – HGZ continues at depth, lateral success Musselwhite – New ‘Lynx zone’ discovery Porcupine – Hoyle Pond success at depth Los Filos – Substantial reserve addition & growth opportunities Replacing mined reserves… 26
  27. 27. 27 Éléonore: pure gold in safe jurisdiction Exploration shaft sinking underway +16 year mine life commencing in 2015 330,000 oz Au*; cash costs < $400/oz Resource, +3 million Au ounces M&I; +6 million Au ounces inferred Pre-feasibility study update by year end *Initial yearly average production target 27
  28. 28. 28 EL MORRO: EXPANDING INTO CHILE* 4.7 million ounces gold 4.0 billion pounds copper Large,under-exploredland position Leverage Goldcorp’s largemine development expertise Updating 2008 feasibility study *Goldcorp interest 70% 28
  29. 29. 29 Advancing new projects Complete HPGR circuit commissioning at Peñasquito Complete scoping studies at Cochenour and Noche Buena Pre-feasibility study update at Éléonore Updated feasibility study at El Morro Prepare to advance Cerro Negro following closing 29
  30. 30. We’re bullish on gold 30 30
  31. 31. 31 MINE SUPPLY IS DECREASING Total Mine Production Source: GFMS for historical production, 2010E, 2011E 31
  32. 32. 32 GLOBAL GOLD DEMAND IS INCREASING GOLD HOLDINGS Gold holdings < 0.7% of Global Financial Assets ($205.2 trillion) Source: CPM Group (Gold holdings consist of consumer physical holdings) 32
  33. 33. Delivering Superior Return Goldcorp +1471% Peers(1)+654% Gold Price+415% Philly Gold/Silver Index+347% Dow Jones Index 9% (1) Peers include Barrick, Newmont, Kinross and Agnico (2) Source: Bloomberg data Dec. 1/00 – Dec. 1/10 33 33
  34. 34. 34 A SUPERIOR INVESTMENT PROPOSITION Growth Leader Low-Cost Producer Outstanding Balance Sheet Low Political Risk RESPONSIBLE MINING 34
  35. 35. APPENDIX A - 2010 SENSITIVITIES 35 35
  36. 36. APPENDIX B - OPERATING COSTS BREAKDOWN Consolidated CA & SA Mexico Canada / USA 36 36
  37. 37. ENDNOTES Total cash costs are defined as cost of sales divided by ounces of gold and silver sold or pounds of copper sold. The calculation of total cash costs per ounce of gold is net of by-product sales revenue (by product copper revenue for Alumbrera; by-product silver revenue for Marlin at market silver prices; and by-product silver revenue for Luismin of $3.95 per silver ounce sold to Silver Wheaton). Goldcorp has included a non-GAAP performance measure, total cash costs per gold ounce, throughout this presentation. Goldcorp reports total cash costs on a sales basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning, and is a non-GAAP measure. Goldcorp follows the recommendations of the Gold Institute standard. Goldcorp believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate Goldcorp’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP 2. All Mineral Reserves and Mineral Resources have been calculated as at December 31, 2009 in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101, or the AusIMM JORC equivalent. Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Goldcorp’s Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. Calculations have been prepared by employees of Goldcorp, its joint venture partners or its joint venture operating companies, as applicable, under the supervision of Maryse Belanger, Director Technical Services. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have been used depending on the mine and type of ore contained in the reserves. Goldcorp’s normal data verification procedures have been employed in connection with the calculations. For a breakdown of Reserves and Resources by category and for a more detailed description of the key assumptions, parameters and methods used in calculating Goldcorp’s Reserves and Resources, see Goldcorp’s Annual information Form/ Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission. 3. Goldcorp’s exploration programs are designed and conducted under the supervision of Charlie Ronkos, Vice President, Exploration of Goldcorp. For information on geology, exploration activities generally, and drilling and analysis procedures on Goldcorp’s material properties, see Goldcorp’s Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission. 37