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Goldcorp, Inc. (GG)

January 4, 2010 Company Profiles No Comments

Goldcorp, Inc. (GG) is one of the world’s largest gold mining companies with the strongest production growth profile among all senior gold producers.  A Canadian company headquartered in Vancouver, Canada,  Goldcorp, Inc. employs more than 10,000 people. The company’s 14 operations and development projects are located throughout the Americas.  Over 70% of Goldcorp’s reserves are in low political risk NAFTA countries.

Goldcorp is North America’s lowest-cost and fastest growing senior gold producer. The Company does not hedge or sell forward its gold production.

These two sentences from the company profile say it all.  This is an aggressive, well managed company with productive properties, ample cash to acquire more and the intelligence not to have hedged against their product.  Before we get into the company profile, I would like you to look at two charts and compare them.  The first is from the world’s largest gold producer, Barrick (ABX) and the second is Goldcorp’s.

Like A Fine Wine That Gets Better With Age!

Like A Fine Wine That Gets Better With Age!

Four the second time in two years, Barrick has come out and said that they were un hedged.  Look at all the profit that they missed out on while they were betting against the product that they mine!

Hedging Has Taken The Upside Out Of ABX

Hedging Has Taken The Upside Out Of ABX

More Bang For The Buck Fro The Undercard!

More Bang For The Buck From The Undercard!

Goldcorp has been in my portfolio for as long as I can remember and it has consistently out performed Barrick as gold was rising.  Goldcorp has the vision and the right management to implement it.  I have always considered Goldcorp as a key, long term holding in my portfolio.

Here are some highlights from Goldcorp’s website that you should familiarize yourself with when considering purchasing their stock.

Goldcorp shares are traded on the Toronto (TSX:G) and New York (NYSE:GG) stock exchanges.

Goldcorp is a leading gold producer engaged in gold mining and related activities including exploration, extraction, processing and reclamation. The Company’s operating assets include the Red Lake, Porcupine and Musselwhite gold mines in Canada, the El Sauzal, Los Filos and San Dimas gold/silver mines in Mexico, the Marlin mine in Guatemala, the Marigold mine (67% interest) and Wharf mine in the United States and the Alumbrera mine (37.5%) in Argentina.  Over 70% of Goldcorp’s reserves are in low political risk NAFTA countries.

Goldcorp has a solid pipeline of projects including the Eleonore gold project in Quebec, Canada,  Peasquito project in Zacatecas, Mexico and the Pueblo Viejo project (40% interest) in the Dominican Republic.   These valuable assets, along with several others, will allow for growth in production for years to come.

Over a short period, Goldcorp has grown from a strong intermediate player to one of the top senior gold producers in the world.  Our growth profile is unmatched in the mining industry with a 50% increase in gold production over  the next five years.

The Board, management and employees of Goldcorp continually work together to deliver results to our shareholders and to have a positive impact within our host communities.  We are committed to delivering responsible, sustainable growth to all stakeholders.

The Game Plan

Goldcorp is focused on bring value to their shareholders by:

1.  Being a low cost gold producer.  Their geologists are expert in finding the land which   will produce the most gold at the lowest possible cost. This adds extra bang to the upside as the price of gold rises.

2. Concentrating their efforts low political risk countries.  It is hard enough to mine gold in stable countries without taking the risks of losing assets to the whims of changing political whims.

Investing In Politically Stable Countries

Investing In Politically Stable Countries

Gold production increased by 11% to 621,100 ounces compared with 557,400 ounces in 2008.

Total cash costs were $295 per gold ounce, net of by-product copper and silver credits, compared with $346 per ounce in 2008.  On a co-product basis, cash costs were $384 per gold ounce, compared with $398 per gold ounce in 2008.

Net earnings of $114.2 million ($0.16 per share), compared to net earnings of $297.2 million ($0.42 per share) in 2008. Adjusted net earnings  amounted to $140.6 million ($0.19 per share), compared with adjusted net earnings of $64.7 million ($0.09 per share) in 2000.

Operating cash flows of $341.9 million, compared to $217.1 million in 2008. Operating cash flows before working capital changes  of $321.1 million, compared to $237.3 million in 2008.

Dividends paid of $32.9 million, compared to $32.1 million in 2008.

This company is doing everything right! When that happens, and it seems that it rarely does, it is due to the management team.  Take the time to read through the list of the management team, because these guys know what they are doing.

Charles A. Jeannes – President and Chief Executive Officer

Charles A. Jeannes was appointed President and CEO of Goldcorp in December 2008.  Mr. Jeannes previously held the role of Executive Vice President, Corporate Development from November 2006 until December 31, 2008.  Mr. Jeannes was former Executive Vice President, Administration, General Counsel and Secretary of Glamis Gold from 1999 until its merger with Goldcorp in November 2006. Prior to joining Glamis, Mr. Jeannes worked for Placer Dome at its San Francisco and Vancouver offices as Vice President of Placer Dome North America. He holds a B.A. degree from the University of Nevada and graduated from the University of Arizona School of Law with honors in 1983. He practiced law from 1982 until 1994 as a shareholder and head of the natural resources section at Woodburn and Wedge in Reno, Nevada and has broad experience in mining transactions, public and private financing, permitting and international regulation.

Lindsay Hall – Executive Vice President & Chief Financial Officer

Mr. Hall was appointed Executive Vice-President and Chief Financial Officer for Goldcorp on April 19, 2006.  Mr. Hall is a Chartered Accountant with extensive experience in senior financial positions in the energy industry. He has held a series of progressively senior positions at various major business units of Duke Energy Corporation, culminating in the role of Vice-President and Treasurer. Mr. Hall also previously held the position of Vice-President, Finance, for Westcoast Energy until it was acquired by Duke Energy Corporation.  Mr. Hall has a B.A. in Economics and a Bachelor of Commerce (Honours) from the University of Manitoba.

Steve Reid – Executive Vice President & Chief Operating Officer

Mr. Reid is a mining engineer with 30 years of extensive international experience in both the operating and business aspects of the mining industry. Prior to joining Goldcorp, he worked for Placer Dome as the Country Manager for the Canadian operations.  He spent a total of 13 years working for Placer, holding numerous corporate, mine management and operating roles worldwide.  Mr. Reid has also worked in leadership positions for Kingsgate Consolidated and Newcrest Mining Limited, where he was responsible for running operations throughout Asia and Australia.

George R. Burns – Vice President, Canada and United States

Mr. Burns was appointed Vice President , Canada and United States on August 8, 2007.  Mr. Burns has over 29 years of experience in the mineral sector including executive, operations, development and engineering leadership roles in gold, copper and coal operations.  Prior to joining Goldcorp, Mr. Burns was Vice President and Chief Operating Officer of Centerra Gold Inc.  Mr. Burns served in various capacities for Asarco including Vice President of mining as well as numerous capacities for Cyprus Minerals Corporation and he began his career with Anaconda Company in 1978.  Mr. Burns received a Bachelor of Science degree in Mining Engineering from the Montana College of Mineral Science and Technology in 1982.

Salvador Garcia – Vice President, Mexico

Mr. Garcia was appointed Vice President, Mexico on May 20, 2008.  Since February 2007 he has held the role as Director of Goldcorp Mexcio and was Director General for the Mexico region until May 2008.  Mr. Garcia has held several positions at Luismin since 1986 including; Mine Supervisor at San Dimas District, Mine Superintendent, Assistant Manager, and San Dimas Manager.  Prior to this, he worked as Chief Mine Production in San Martin, Zacatecas for Industrial Minera Mexico (Grupo Mexico) until 1985.  He received is B.S. in Mining Engineering from the University of Guanajuato in 1978.  Mr. Garcia is a member of the Mexican Mining Engineers, Metallurgists and Geologists Association and is a member of the Board of the Mexican Mining Chamber.

Tim Miller, Vice President, Central and South America

Mr. Miller is responsible for Goldcorp’s Central Amercian businesses at Marlin, San Martin and Cerro Blanco. Tim has a B.Sc degree in Chemistry from the University of New Mexico and an M.B.A from Webster Universtiy.  He worked with Gold Fields North America at gold mines in New Mexico and California, and spent several years working in gold mining in West Africa.  He joined Glamis Gold Ltd. in 2000 and was instrumental to the permitting, design and construction of the San Martin and Marlin mines in Honduras and Guatemala.

As with all investments, I recommend that you do your own due diligence so that you are comfortable and know what you are investing in.  I have done mine and I am more than pleased with the result.  I have owned this stock for a long time in its many different forms and I am glad that I stayed the course while the company evolved into its current form. If you are looking for a gold miner to be the foundation of your portfolio, this is it.

Till next time, good luck and good trading!

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