2011 denver gold_forum_september


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2011 denver gold_forum_september

  1. 1. Denver Gold Forum SEPTEMBER 18 -21, 2011
  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, 2010 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. All amounts are in U.S. dollars, unless otherwise stated.2
  3. 3. • Growth LeaderSUSTAINABLE • Low Cost ProducerPROSPERITY • Outstanding Balance Sheet • Low Political Risk • Responsible Mining3
  4. 4. Proven Strategy • Growing gold • Continued gold focus production • Low country risk • Low-cost producer • Disciplined M&A • Accelerating cash flow Disciplined strategy and earnings Execution Portfolio Management Shareholder Sustainable Return Prosperity • Funding growth without • Environmental dilution stewardship • Organic reserve growth • Human rights • Active dividend policy • Safety4
  5. 5. Gold Price Has Increased 11 Consecutive Years Why Gold? Flat mine supply Growing physical demand - Asia - Central bank buying Growing investment demand - Inflation hedge - Currency protection - Safe haven/asset class5
  6. 6. Sector Leading Cash Margins REALIZED GOLD PRICE $1,516 ($ per Oz) $1,240 $978 $868 1,331 $703 966 683 563 540 305 295 274 163 185 2007 2008 2009 2010 2011 YTD By-Product Cash Costs Cash Margin6
  7. 7. Strong Growth on a Per Share Basis Earnings / Share2 $1.50 (US$ / share) $1.37 Cash flow / Share1 $1.00$2.50 (US$ / share) $0.80 $2.33 $0.62 $0.56 $0.50$2.00 $1.61 $0.00$1.50 2007 2008 2009 2010 $1.31 $1.22$1.00 Reserves / Share3 (per 1000 shares)$0.50 80.0 78.0 70.0 65.0 66.7$0.00 61.5 60.0 2007 2008 2009 2010 50.0 40.0 4 2007 2008 2009 20101 Cash flow before changes in working capital2 Adjusted earnings per share3 Reserves for gold only4 Includes Cerro Negro update March 2011 7
  8. 8. Steady, Continous Reserve Growth Success 2010* INCREASE OF 28%, 62,250 17% ON A PER SHARE BASIS 48,800 46,300 43,400 39,700 2006 2007 2008 2009 2010* Gold proven & probable reserves (000’s oz) 2011 Exploration Budget - $225M* Includes Cerro Negro update March 2011 8
  9. 9. Q2 2011 Highlights Q22011 Q22010 Revenues $1,323M $815M Gold production 597,100 609,500 Cash costs $/oz - By-Product $185 $363 - Co-Product $553 $436 Adjusted net earnings $420M $199M Operating cash flows $717M $390M9
  10. 10. Goldcorp Leverage Relative to Physical Gold • Leverage in operating costs • No holding costs • Pays dividend 111% • Organic growth 84% 62% 25% Gold Price Revenues Operating Cash Adjusted Flow Earnings% increase Q2 2011 compared to Q2 201010
  11. 11. Updated Guidance 20111 20112 Updated Guidance Guidance Gold production (M oz) 2.65 - 2.75 2.50 - 2.55 Cash costs $/oz - By-Product $280 - $320 $180 - $220 - Co-Product $475 - $500 $500 - $550 Capital expenditures $1.5B $1.5B (+$290M at Pueblo Viejo) (+$490M at Pueblo Viejo) Exploration expenditures $170M $225M Tax rate 30% 28%1 2011 price assumptions: Au=$1250/oz, Ag=$20/oz, Cu=$3.25/lb, Zn=$0.90/lb, Pb=$0.90/lb2 2011 price assumptions: Au=$1450/oz, Ag=$30/oz, Cu=$4.10/lb, Zn=$1.02/lb, Pb=$1.14/lb11
  12. 12. Financial Position – Excellent Liquidity Investment Grade1 Balance Sheet As at June 30, 2011 Cash & cash equivalents $1.4B Available debt facility – undrawn $1.5B Convertible senior notes – due 2014 $862.5M Forecast avg. annual cash flow over $2.5B2 next 5 years Net cash (debt) $516M1 Moody’s: Baa2; S&P: BBB+; Fitch: BBB2 Price assumptions 2011-2015: Au=$1250/oz, Ag=$20/oz, Cu=$3.25/lb, Zn=$0.90/lb, Pb=$0.90/lb12
  13. 13. Excess Cash Flow Prioritization Fund existing 60% growth profile Continue investments in organic growth Flexibility for selective M&A Regular dividend growth13
  14. 14. Focus on Stable Jurisdictions CANADA Argentina 5% Guatemala 16% USA DOMINICAN Canada REPUBLIC 46% MEXICO GUATEMALA Mexico 27%AMERICAS ORIENTATION US 6% 2011E Gold Production OPERATING MINES CHILE ARGENTINA DEVELOPMENT PROJECTS14
  15. 15. Steady, Strong Growth Profile (Ounces) 4,000,000 4.0 Moz 3,500,000 3,000,000 2,500,000 2,000,000 2011E 2012E 2013E 2014E 2015E Au est. production15
  16. 16. A Robust Development Pipeline Peñasquito UG Red Lake Bulk UG Scoping Agua Rica Cerro Blanco Noche Buena Feasibility El Morro (2015) Camino Rojo (2014) Éléonore (2014) Construction Cochenour (2014) Cerro Negro (2013) Pueblo Viejo (2012) Peñasquito (2010) Production Los Filos (2008) Marlin (2006) Red Lake & other operating mines16
  17. 17. Cerro Negro – Advancing a World Class Project• High grade vein system• Outstanding reserve growth potentialUpdated feasibility study results: - 550 koz Au annually (1st 5 years) - <$200 /oz cash costs* (1st 5 years) - Initial capital $750M - First production 201317
  18. 18. Cerro Negro – Advancing Construction• 78,000 meters exploration drilling year to date• Eureka decline advanced to 1,350 meters• 3 levels of development into Eureka vein• Detailed engineering well underway• Long lead-time items ordered• Construction expected to commence shortly18
  19. 19. Cerro Negro – Large Percentage of Veins Untested 2.0m Pre-mineral rock within Bonanza elevation 41.12 g/t Au 217 g/t Ag Concession Boundary San Marcos 11.0m 111.00 g/t Au 238 g/t Ag El Retiro4810000N Mariana Norte 1.5m Buena Vista 92.6 g/t Au Mariana Central 72 g/t Ag 6.5m Mariana Sur 150 g/t Au Eureka 172 g/t Ag 4.0m 2.0m Sur Vein 3.67 g/t Au 5.4 g/t Au 3 g/t Ag 3,244 g/t Ag Vein Zone4805000N 8.0m 20.1 g/t Au 265 g/t Ag Bajo Negro Quartz vein Fault 5 kilometers 2400000E Areas of vein tested19
  20. 20. Éléonore – Pure Gold in a Safe Jurisdiction• Currently sinking exploration shaft• 3.03M oz Au reserves +0.48M oz Au M&I resources +4.17M oz Au inferred resources• Development plan: - Upper/lower mine concept; 7 ktpd - Mine life ~15 years - +600,000 oz Au - Cash costs: <$400/oz - Capex - $1.4B• Cree agreement complete20
  21. 21. Éléonore – Progressing Towards Construction• Permit approval expected in Q4 2011• Exploration shaft over 400 metres• Exploration ramp extended over 200 meters• Construction camp development underway• EPCM contract awarded• Continued exploration success21
  22. 22. El Morro – A World Class Project in Mining Friendly Chile • 5.7 million ounces of Au reserves* • 4.3 billion pounds of Cu reserves* • Large, under-explored land position • Permit received Q1 2011, access infrastructure in progress • Feasibility study update Q3 2011* Goldcorp interest 70% 22
  23. 23. Pueblo Viejo – Next New Source of Gold Production • 9.5 million ounces of Au reserves* • Life of mine +25 years • $490 million capital budget for 2011 • First gold mid-2012 • Annual output 415,000 to 450,000 ounces per year1 in first five years* Goldcorp interest 40% 23
  24. 24. Cochenour – Key Growth Driver in Red Lake District• Initial resource of 2.7M gold ounces• Construction underway: - Mine life ~20 years - 250,000 - 275,000 ounces Au annually - Cash costs < $350 per ounce - Capex - $420M - First production late 201424
  25. 25. Cochenour – Construction Progress• Shaft widening commenced• Haulage drift 33% complete - 2 rigs actively drilling - Exploration potential on untested ground• Surface exploration with 4 drill rigs• Installation of headframe surface infrastructure underway25
  26. 26. Red Lake – Haulage Drift Exploration Potential East Western Discovery Rahill - Bonanza Zone Drift location at end of 2011 Current drift location Haulage Drift Bruce Channel Discovery26
  27. 27. Red Lake – New Opportunities at World’s Richest Gold Mine• Robust, low cost gold production• 2011 gold production forecast of 665,000 ounces• 2011 exploration budget $36M - High Grade Zone continues at depth - Hanging Wall exploration success• District optimization plans advancing: Cochenour, bulk u/g mining27
  28. 28. Peñasquito• 2011 gold production forecast - 250,000 ozs at negative cash costs• Tremendous cash flow generator in 2011 and beyond• Average annual production: - 500Koz Au; 204Kt Zn; 90.7Kt Pb; 28Moz Ag• 22-year mine life28
  29. 29. Peñasquito – Operating Refinements in 2011• Supplementary feed to HPGR circuit on track for completion by Y/E 2011• Tailings dam upgrade on schedule for completion by Y/E 2011• Chile Colorado dewatering wells in process• Ore body grades and recoveries exceed expectations29
  30. 30. Peñasquito – Advancing District ProjectsCamino Rojo• 42,500 meters drilled in 2011• Testing oxide & sulphide expansion• Feasibility study due H1 2012Noche Buena• Resource expansion drilling continues• In-fill drilling on higher grade mineralization trends30
  31. 31. Delivering Superior Returns960% Goldcorp760% +761%560% Gold Price +518% Philadelphia360% Gold / Silver Index +278% Peers*160% +273% Dow Industrials +28% -40% 2001 2003 2005 2007 2009 2011* Peers include Barrick, Newmont, Kinross and Agnico Source: Bloomberg data Sept. 15/01 – Sept. 15/1131
  32. 32. • Growth Leader SUPERIOR • Low Cost ProducerINVESTMENT • Outstanding Balance SheetPROPOSITION • Low Political Risk • Responsible Mining32
  33. 33. Appendix A – Metals Production (% of Revenues) 100% 15% 14% 13% 12% 12% 90% 80% 70% 60% 50% 85% 86% 87% 88% 88% 40% 30% 20% 10% 0% 2011E 2012E 2013E 2014E 2015E Total Precious Metals Base Metals33
  34. 34. Appendix B – Increasing GEO Production (Ounces) 6,000,000 5.6 Moz 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GEO actual production GEO est. production34
  35. 35. Appendix C – 2011 Sensitivities Change CFPS By Product Cash FCF Base Price ($/share) ($mm) Increments Costs ($/oz) Gold Price ($/oz) $1250 $100 $0.25 $196M Silver Price ($/oz) $20.00 $1.00 $0.02 $10 $18M Copper Price ($/lb) $3.25 $0.50 $0.02 $12 $17M Zinc Price ($/lb) $0.90 $0.10 $0.03 $14 $26M Lead Price ($/lb) $0.90 $0.10 $0.02 $7 $13M Canadian Dollars 1.03 10% $0.04 $20 $100M Mexican Peso 12.50 10% $0.02 $11 $24M Diesel ($/barrel) $85.00 10% $0.01 $2 $8M Electricity ($/kWh) $0.08 10% $0.02 $3 $17M35
  36. 36. Appendix D – Operating Costs Breakdown Consolidated 11% 4% 22% 4% 2% 16% 14% 9% 6% 12% Labour Contractors Fuel Costs Power Maintenance Parts Consumables Tires Explosives Site Costs Others Canada / USA Mexico CSA 5% 4% 14% 10% 16% 17% 2% 2% 4% 15% 11% 4% 40% 5% 7% 3% 2% 2% 7% 8% 9% 20% 18% 7% 11% 17% 4% 6% 14% 16%36
  37. 37. Endnotes 1. Goldcorp has included non-GAAP performance measures, total cash costs, by-product and co-product, per gold ounce, throughout this presentation. 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 revenues for Alumbrera; by-product silver revenues for Marlin at market silver prices; by-product lead, zinc and 75% of the silver for Peñasquito at market silver prices and 25% of the silver for Peñasquito at $3.90 per silver ounce sold to Silver Wheaton). The Company 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. The Company follows the recommendations of the Gold Institute Production Cost Standard. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use this information to evaluate the Company’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. Total cash costs on a by-product basis are calculated by deducting by-product copper, silver, lead and zinc sales revenues from production cash costs. Commencing in 2011, production costs are allocated to each co-product based on the ratio of actual sales volumes multiplied by budget metals prices of $1,250 per ounce of gold, $20 per ounce of silver, $3.25 per pound of copper, $0.90 per pound of lead and $0.90 per pound of zinc, rather than realized sales prices. 2. All Mineral Reserves and Mineral Resources have been calculated as at December 31, 2010 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, Senior 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