John Ing on VIA>> Howard: They sure are busy in the deal department over at goldcorp these days after turning as part of the barrick offer for placer as a buying -- buyer of $1.3 billion placer assets goldcorp announced another acquisition today of virginia gold mines. And its eleonore project project in james basement earlier i spoke with John Ing. I asked if this purchase is a good fit for goldcorp.
>> John Ing: Well, there's no question that this is a very good deal for goldcorp. But again they paid a handsome price. The eleonore project is in james bay, northern quebec. It's been a growing development, it's one that has been one of my top picks for an exploration play.
>> Howard: But when you say handsome price how handsome?
>> John Ing: Well, they've been at it for a while. They've had three rigs running. They've outlined about a two million resource. So the price tag is about a $505 million, half a million dollars what they are play paying for that resource is definitely on the high side. Probably double what one would pay. My guess is that to make this work they're looking for $4 million, -- four million, five million ounces that indeed would make it work.
>> Howard: But at this price it's financially risky?
>> John Ing: I wouldn't say it's financially risky. From a geological point of view it's at about the third year. They've been developing this resource. There's a strike lnth of about two kilometres long right now. And the deposit is about 600 metres. In fact they deepened it by another 100 meters in depth. So the outline of the deposit is growing. But it's interesting is that this project it's half a billion dollars and there's not yet, howard a feasibility study. That is normal to pay those big dollars.
>> Howard: So is goldcorp putting the cart before the horse a little bit?
>> John Ing: Well, i think it's indicative of goldcorp's pension to expand and grow with using their stock as currency. This project while it is very swift and it certainly ties it up. There were a lot of other majors and entremedia companies that were looking at this virginia. So the fact they're paying 40 odd% premium is indicative of the early bird gets the worm in this case.
>> Howard: Do you anticipate any of those other players to perhaps step up with a competing bid? >> John Ing: The gold mining business is generally very conservative, howard. So i think everybody is going at the price paid however, I think that if you do your arithmetic, and do you have a higher price expectation, and my gosh i have a very high price expectation for the price of gold, that it could work for some of the other majors. Now of interest is that some of virginia's partners in this project include companies like placer dome, companies like bhp and nor anda. Noranda as we know is now falconbridge and placer dome is likely to be plas -- is likely to be barrick. >> Howard: So what do you think of the way the new goldcorp is operating? It's a lot different than when rob mcewen was running it?
>> John Ing: That's correct. New goldcorp is like wheaton river which has grown through acquisition. Mcewen liked to buy assets but very definitely he was price sensitive. Rob mcewen liked to pay cash. He would not incur any debt. In this case, ian telfer has used his stock as currency. As far as the red lake there will be acquisition when barrick acquires placer. That will require some debt. So it's a strike, there's a big difference between the two players.
>> Howard: Does it make it a riskier company goldcorp?
>> John Ing: The fact is that if you believe oo in higher price of gold the answer is no. If, however, you believe that gold is at its high the answer is yes. I think that ian telfer is taking advantage of the momentum and correctly so of the market. He's been early bird in a great many cases. He's used his currency well. He's grown it well and, and, and that is a aggressive. As i said, the mining business is generally a conservative business so the fact that ian has grown through acquisitions. After all there are not that many gold companies around. It's like a game of musical chair, howard. There's not many chairs left.
>> Howard: Very quickly to finish up with gold at $512 what happened when so many shutter mined become operational again. Does that throw the supply balance out?
>> John Ing: That's a good question. It takes time andÑi money to get those closed mines up and running again. In addition, you must remember is that this is the reason why there's so many acquisitions is the reality is that there are so many mines that are getting deeper much more expensive. And there's actually less golgr being brought to the market. So we need some of these old mines to be opened up again. It just takes a long time. We're talking about probably one year, two years down the road. In fact, virginia's deposit no fooes feasibility study. We're looking at maybe 07, 08 drn 08, 09. >> Howard: Any position in goldcorp or virginia or relationship with?
>> John Ing: My wife fortunately has virginia.
>> Howard: That's John Ing.
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