Goldcorp Inc. (GG)
Interview with:
Robert McEwen, Chairman and CEO
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
Red Lake Mine, which is the World’s richest, and Canada’s largest, gold mine.


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Goldcorp is a financially secure company, with excellent growth potential and is one of North America's largest unhedged gold company

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Basic Materials

Goldcorp Inc.

145 King Street West, Ste. 2700
Toronto ON M5H1
Phone: 416-865-0326

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Robert McEwen
Chairman and CEO

Interview conducted by:
Lynn Fosse
Senior Editor
October 2004

Biographical Profile

Robert R. McEwen 

Rob McEwen is the Chairman and CEO of Goldcorp Inc., owner of the richest gold mine on the planet and one of the world’s top 10 gold producers.  Rob followed his father into the investment industry and also developed a passion for gold.  In 1990 he jumped into the mining industry and since then has transformed a collection of small companies into a mining powerhouse.  Since 1993, when Rob started restructuring Goldcorp, its market capitalization has grown from $50 million to $2.7 billion and Goldcorp’s share price has increased at 36% compound annual growth rate.  In August 2000, Business Week named Goldcorp as 1 of the 50 most innovative companies on the web, worldwide!  His efforts have been further recognized by the following awards: 

Recent Awards and Recognition:

January 2003:   The Northern Miner’s “Man of the Year” Award for 2002

September 2002:  Ernst & Young’s 2002 Ontario Entrepreneur of the Year Award in the Energy Category

August 2002:   Canadian Business – Annual Board Survey

            16th Best Board of Directors in Canada

March 2002:    Prospectors and Developers Association of Canada (PDAC)

2001 Viola R. MacMillan Award for Developer of the Year

March 2002:   Fast Company’s “The Fast 50” - Champion of Innovation.

            First Annual Global Readers’ Challenge

February 2002:  Investor Relations Magazine 2002 Awards

            Best Senior Management Communications in Canada – nominated for three other awards.

September 2000:  Business Week’s “Web Smart 50”

One of the 50 most innovative companies on the web worldwide.

He holds an MBA from Schulich School of Business, York University, Toronto, Canada, a BA from University of Western Ontario, London, Ontario, Canada.

Rob is a passionate innovator and marketer and an avid recreational competitor.  A member of WPO, the Canadian Council of Chief Executives and the Dean’s Advisory Board, Schulich School of Business.

His community efforts are designed to encourage excellence.  Over the past two years, Rob has donated $10 million to establish the McEwen Centre for Regenerative Medicine at the Toronto General Hospital, $1.5 million to Schulich School of Business, Toronto and $1.0 million to a church and two museums.

Company Profile:
Goldcorp is a low risk, financially secure company with excellent growth potential.   With all of its operations in North America, it has one of the lowest political risk profiles of any of the World’s gold producers.  The Company’s financial risk is also exceptionally low and its balance sheet is “bullet proof” with NO DEBT, and $410 million in liquid assets at December 31, 2003 (Cash, Gold and Marketable Securities).

Goldcorp’s Red Lake Mine is the World’s richest, and Canada’s largest, gold mine.  The 40% increase in production forecast for the Red Lake Mine, to more than 700,000 ounces at a cash cost of $70 per ounce by 2007, provides low risk, value-added, organic growth which, few other gold companies can match.

With industry-leading margins (gross operating: 66.3%; net profit: 37.6%), Goldcorp is one of North America’s most profitable gold companies and achieved record earnings in 2003. The Company also pays a $0.18 per share dividend in twelve equal monthly installments and intends to increase this dividend as the gold price rises.  Goldcorp remains COMPLETELY UNHEDGED, and by market capitalization is North America’s largest unhedged gold company.

Goldcorp’s shares are listed on the New York (NYSE) and Toronto Stock (TSX) Exchanges under the symbols of, respectively, GG and G.   Options are listed on the Chicago Board of Options Exchange (CBOE), American Stock Exchange (AMEX) and the Pacific Stock Exchange (PCX) in the United States and on the Montreal Exchange (MX) in Canada.

CEOCFOinterviews: Mr. McEwen, what was your vision when you came to Goldcorp, and over time, how has that been fulfilled?

Mr. McEwen: “I wanted to build a company that would be in the top ten. I saw consolidation occurring in the industry back in the nineties. We were a small player and I thought ‘let us strive to get into the top ten largest companies in the industry - in the world’. Today, we are there. Along the way, there were many challenges but they were met with innovation and persistence as well as good luck. It is a very old industry and as such, has much inertia. One can take technologies from other industries and apply them to this industry with much success.”

CEOCFOinterviews: Will you tell us about Goldcorp today?

Mr. McEwen: “We are a North American based company and our head office is in Toronto. We are listed on the NYSE and TSX. About 65% of our trading volume occurs on the NYSE; our symbol there is GG. We happen to own the richest goldmine in the world. It produces gold at one of the lowest costs in the industry, which allows us to have tremendous profit margins. Recently we were ranked as number two in Canada of the 800 largest companies for a five-year profit growth. If we had been included in the S&P 500, in terms of profit margins for 2003, we would have ranked fifth. It is a very profitable business and we believe the price of gold is going much higher, and in that case, we would just become more profitable.”

CEOCFOinterviews: What is it about Red Lake mine that make it so inexpensive to produce?

Mr. McEwen: “Red Lake is profitable because of the richness of the gold that we have in the mine. There is a high concentration of gold per ton of rock. It allows us to get our cost of production down to where it is eighty dollars an ounce. When you can produce gold at eighty dollars an ounce and sell it for four hundred, there is a large profit margin in that. We have been withholding gold, so we do not sell all of our production. This year we have been holding back one third of our production, which means we only sell two thirds of the gold we produce. We store the balance in bank vaults in Toronto and NYC, awaiting higher gold prices.”

CEOCFOinterviews: How do you gauge where it is on the cycle?

Mr. McEwen: “Gold hit a twenty year low in both 1999 and 2001. Since then it has started to climb because of long range economical cycles, which are repeating again. These are cycles that have durations of thirty plus years. We are seeing today, economically a great deal of speculation brought on by very low interest rates, an encouragement to take on a lot of debt at government, corporate and personal levels. That has led to excessive speculation in all assets. We have also experienced as a society an enormous amount of inflation despite what the government is saying. Anybody who is buying gas, food or a home will attest to the fact that prices have moved up quite sharply over the last several years and I think we are just seeing the beginning of that. It will ultimately lead to a situation where the money in your bank and many of your investments will change in value to the point that you could have some gold sitting there. Right now, from a fundamental standpoint, annual mine production is increasing and investors are slowly starting to look at gold as something to put in their portfolios. The supply picture is improving because fewer gold companies are selling the gold forward, which is called hedging. I think that hedging is the toxic waste dump of the industry. Companies that still have hedging on their books are only going to feel pain.”

CEOCFOinterviews: Are you primarily in North America?

Mr. McEwen: “All of our operating mines are in North America. We have made investments in a number of smaller junior exploration companies that are allowing us to extend our reach beyond where our operating mines are in South Dakota, North Western Ontario and one of the Canadian prairie provinces of Saskatchewan.”

CEOCFOinterviews: Are you looking for other properties in North America?

Mr. McEwen: “I am very much a contrarian’s investor and I have tried to push that through the company that I like to buy when other people are selling. We constantly are monitoring the scenes. We have a number of investments in junior exploration companies, so our doors are always open to receive new ideas and proposals, but we are quite selective about what we want to buy. The third and fourth quarter of last year did not seem like a good time to buy. But those times are always followed by a better time to buy. Right now, I think is an excellent time to look at putting money into gold stocks.”

CEOCFOinterviews: Are you involved with any minerals in addition to gold?

Mr. McEwen: “We are also involved with industrial minerals, which are very small. We used to have more but we formed one of our operations, which were a limestone operation, to finance the development of our Red Lake Mine. The other product that we have is sodium sulfate.”

CEOCFOinterviews: What should investors be looking for over the next few months?

Mr. McEwen: “We have a very exciting expansion program going on at our Red Lake Mine, which will take a little more than six months. By the second half of 2006, we will have completed an elevator shaft that will be down 7,200 ft. below surface. It will allow us to increase our production at our Red Lake Mine from 500,000 ounces a year to 700,000 ounces and allow us to drop our cost of production below seventy dollars an ounce. It has a lot of extra capacity built into it. We are excited about that new platform because it will allow us to accelerate our new exploration. In the next six months, we have reported record earnings in the first half. Our exploration continues to intercept good results at 2.2 ounces over seventy ft. and 7.8 ounces over nineteen ft. We are finding that our ore body not only goes deeper but it is showing indications of stretching both also laterally. I would think that most of the news would come from an exploration standpoint, both through Goldcorp and a number of the junior exploration company of which we have invested.”

CEOCFOinterviews: What are your challenges going forward?

Mr. McEwen: “We are in a good position to take advantage of opportunities that would arise. We do not have any debt and we have not sold any of our gold forward. At the end of March, we had 380 million dollars in liquid assets, strong cash flow and North American based. We have been looking to add production. I like to buy when others are not buying. We have been looking for situations where there has been a market correction or a company has tripped and we can offer them some assistance to get back up and add production and reserves.”

CEOCFOinterviews: What should potential investors know about Goldcorp that they do not realize when they look on the surface?

Mr. McEwen: “I would say we are an innovative company. We used the internet to explore to great success back in 2000-2001. We were looking for six million ounces of gold. We took all of our proprietary geological data, pushed it out over the internet and asked the mining world to look at it and tell us where we would find the next six million ounces of gold. We offered prizes totaling half a million dollars for those ideas. Since that time, we have found the six million ounces that we were looking for and today we are looking for another six million ounces of gold. That was the first time any mining company in the world had given away freely the proprietary geological data. I think of it as brainstorming session over the web. Business Week named us as one of the fifty most innovative companies on the web worldwide September 2002.  We hit a lot of recognition for the ways we are approaching that and treating it more as a business matter than a riding commodity cycle. Rates of return on invested capital are quite central to our operating premise. We want to compete with the best run companies that are listed, rather than just in our industry. That is where some of the other performance comes from. We have had to make some hard decisions along the way. There was a labor dispute at Red Lake Mine that culminated in a strike and the strike lasted for forty six months. At the end of the period, we got what we were looking for and that was better utilization of our assets, the ability to introduce modern technologies unimpeded and a better trained workforce. We are a non-union mining company, at least at our Red Lake Mine, so it has given us a lot of flexibility. You have to look at the business and redefine the basic assumptions, question them and generate alternatives that have not been thought of. After all, if you want to get to your destination, if you stand in line, you are only going to get there as fast as the person in front of you. Our tendency is to step out of line and head toward the target. It is not a straight line, but I find that you always get there before the person you would have been standing behind.”

CEOCFOinterviews: How do you get the investors that are looking for a good business as opposed to a good gold company?

Mr. McEwen: “Much of that comes from just looking fundamentally. You look and ask yourself if we pay a good dividend? Yes, we do pay a dividend monthly and it is attractive from a gold perspective and it yields about one and a half percent. Our financials are very solid and the performance has been superb. When you look at profit growth, we rank second of the 800 largest companies in Canada. In terms of profit margins, we are competitive with the biomedical and software industries; we have gross margins of 68%, net margins of 36%. Take away the fact that we are mining gold, and we are a very strong company. If you believe, like I do, that the price of gold is going higher the profit line only gets bigger. We have increased our dividends three times and paid out 103 million dollars in dividends since we started paying dividends in 2001. The philosophy is to keep sharing our gains and be stricter in management with the amount of capital they have to employ.”

CEOCFOinterviews: Any final thoughts?

Mr. McEwen: “I think every investor should consider having some exposure to gold. One does not know if it is going to be inflation or deflation going forward but the times are becoming more uncertain and history has demonstrated that having gold in your portfolio has been prudent during such times.”


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“We have a very exciting expansion program going on at our Red Lake Mine, which will take a little more than six months. By the second half of 2006, we will have completed an elevator shaft that will be down 7,200 ft. below surface. It will allow us to increase our production at our Red Lake Mine from 500,000 ounces a year to 700,000 ounces and allow us to drop our cost of production below seventy dollars an ounce. It has a lot of extra capacity built into it. We are excited about that new platform because it will allow us to accelerate our new exploration. - Robert McEwen


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