DENVER-USA (Sept 24) When gold prices crashed in recent times, global mining companies fretted and fuming, trying to cut down cost and carrying out mining write downs.
But what do global mining giant Goldcorp Inc. (TSX: G)(NYSE: GG) think of the extremely highly volatile gold prices and how the weaking of the yellow metal prices on mining in general?
According to Goldcorp President and Chief Executive Officer Chuck Jeannes, the current gold price offers a great opportunity for the company to enforce some real cost cutting and carry out operational excellence in the coming days.
“You never want to let a good opportunity go to waste, and the reduction in the gold price has allowed us to go back to our sites and insist on some real discipline in our cost cutting efforts,” Jeannes said. “ I see this as a good opportunity for Goldcorp to focus on the financial discipline and cost cutting – what we call operating for excellence – that were already underway but have become more high-profile in this current price environment,” Jeannes told Kitco News at the Denver Gold Forum.
According to Jeannes, gold prices will rise in future, as the basic fundamentals of the metal commodity remains strong for three reasons.
First, he says, the way Western governments are in deficit spending mode, which eventually is going to have to result in inflation, which will be positive for gold price.
Secondly, central banks continue to buy gold and “I can’t envision a scenario where they would go back to more exposure of the US dollar as a reserve currency.”
Thirdly, Jeannes said the world is seeing the rise of the Asian consumers who are buying lots of physical gold.
Goldcorp booked a high loss of $1.93 billion in the quarter, largely in part to a non-cash impairment charge of $1.96 billion on its Mexican-based Peñasquito mine, as gold prices plunged by 25% in the last first eight months.
On Peñasquito mine, Jeannes had this to say:
“The big news with Peñasquito is water supply and that’s been a challenge getting enough water to continue the ramp-up we envisioned to 130,000 tons per day, to get up to the full capacity of the plant,” Jeannes said. “And we have now found a new water supply, we’ve approved a construction project to drill that and bring power, and the pipelines to get the water back to the site, which is about 50 kilometers away.”
The Goldcorp CEO said that Peñasquito is on track to meet its production guidance for the year, as well as company-wide production guidance reaching 2.55 million to 2.8 million gold ounces at total cash costs between $1,000 and $1,100.