Goldcorp Inc.

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Goldcorp Inc.






Park Place
666 Burrard Street, Suite 3400
Vancouver, British Columbia V6C 2X8
Telephone: (604) 696-3000
Toll Free: (800) 567-6223
Fax: (604) 696-3001
Web site:

Public Company
Employees: 4,657
Sales: $1.71 billion (2006)
Stock Exchanges: Toronto New York
Ticker Symbols: G (TSX); GG (NYSE)
NAIC: 212221 Gold Ore Mining

Goldcorp Inc., true to its name, engages in gold mining, including exploration, extraction, processing, and reclamation. As an upstart company, Goldcorp resurrected the Red Lake Gold Mine. Located in Ontario, Canadas largest gold mine also claims status as one of the worlds richest and lowest cost producers. The Wheaton River Minerals acquisition in 2005 broadened Goldcorp geographically, into Mexico, South America, and Australia. The next year, dual purchases of Barricks Placer Dome assets and Glamis Gold Ltd. propelled Goldcorp into the worlds upper echelon of gold mining companies.


Rob McEwen, founder of Goldcorp Inc., caught the gold bug as a teenager in the 1960s, listening to his father talk at the dining room table about his travels around the world, a return to hard currency and his investments in gold, Canadian Business recounted. McEwen then followed in his fathers footsteps, entering the investment industry and, for a short time, partnering with him in the securities firm McEwen Easson.

Upon his fathers death in 1986, McEwen gained control of Goldcorp. The senior McEwen had established the closed-end investment fund three years earlier. Holding shares in gold mining companies and bullion, the fund value plummeted in 1987. Investors wanted to shut it down, but McEwen had other ideas.

McEwen envisioned transforming the entity into an operating company. The transition was not simple. He faced stiff competition, when he moved to gain control of Dickinson Mines in 1989. The company primarily consisted of the Red Lake Mine, in northeastern Ontario and situated next to a well-developed Placer Dome Mine. The battle, once the mine had been acquired, was far from over. The mine was a high-cost operation. Despite naysayers, McEwen set out on the road to upgrade the company, from boardroom to drill site.

In March 1995, the discovery of deposits holding greater gold concentration validated McEwens decision to take on Red Lake. A subsequent United Steelworkers strike coupled with a drop-off in the price of gold afforded McEwen an opportunity to overhaul the mine. Yet idling the mine, however timely, created other concerns.

Neighboring Placer Dome Campbell Mine sat on the same deposit as Red Lake. Fearing a takeover, McEwen took another risk. In March 2000, The Goldcorp Challenge was implemented. Goldcorp posted all its proprietary mining data on a web site and asked the world to help them find Red Lakes next six million ounces of gold, Canadian Business s Andrew Wahl related. In the end, McEwen usurped any Placer Dome advantage in a bid for Goldcorp, was directed to new deposits, and inspired to pioneer a mining virtual-reality lab. With the protracted strike over, laborers returned to a state-of-the-art mine able to produce ten times the gold at one-sixth the cost.


Goldcorp moved to acquire Vancouver-based Wheaton River Minerals Ltd. in late 2004. Goldcorp predicted the new entity would be one of the worlds lowest cost producers, producing 1.1 million ounces at $60 per ounce during 2005. Combined, Goldcorp and Wheaton held 10.5 million ounces proven and probable reserves, at least $500 million in cash and gold bullion, no debt, and a $3 million credit line, according to American Metal Market. Rob McEwen was slated to continue as chairman with Wheaton Rivers Ian Telfer as CEO.

The closer we got to it, the better it looked, Telfer told American Metal Market. Goldcorp was looking for growth and a resolution to their management situation and Wheaton River was looking for growth and to reduce its copper value. We do both, and were excited about the potential for stock to go up.

Earlier in the year, McEwen had announced his plans to step away from his leadership position with the company he built. Under new management, Goldcorp was expected to concentrate growth in the Americas, primarily, followed by Australia.

The grand plan quickly grew complicated when Glamis Gold Ltd. made a hostile takeover bid for Goldcorp. The Reno, Nevada-based mining company had its eyes on Goldcorps Red Lake operation. The Glamis offer was contingent on Goldcorp dropping Wheaton: two previous bids for Wheaton by other suitors had already been scuttled during 2004.

The strongest gold rally in more than two decades had driven both friendly and hostile takeovers in the industry. Since 2001 gold was up from about $250 per ounce to more than $450 per ounce, and industry watchers expected the price of gold to continue to rise, according to a February 2005 Canadian Business article.

The Glamis all-stock offer for Goldcorp was worth $3.5 billion, while the Wheaton stock swap was valued at $2.4 billion, John Gray reported for Canadian Business. The larger deal deteriorated, however, becoming more like a bitter U.S.-style political campaign, complete with mudslinging, personal attacks and even negative advertising, Gray observed.

Ultimately, Goldcorp shareholders shut out Glamis and approved the Wheaton deal. The merger transformed Goldcorp from a company with a single significant gold property in northwestern Ontario, to an international gold and copper producer with mines in Mexico, Argentina, Australia, and Brazil. Annual gold production doubled from 600,000 to more than 1.2 million ounces, placing Goldcorp in fifth place among North American gold producers behind Barrick Gold, Placer Dome, Newmont Mining, and Kinross Gold, respectively. Goldcorps elevated status made the company attractive to not just gold investors, but pension funds and mutual funds, both in Canada and the U.S., Telfer told Canadian Business.

Nonetheless, the industry trend toward consolidation most likely would dampen future deals, limiting the number of available companies and, consequently, driving up the cost of those remaining on the market. Rising gold prices, moreover, further increased valuation of potential purchase targets. As for buying less expensive start-ups, Goldcorp operations lacked experience in the early mine development phases, according to Canadian Business. Both McEwens and Telfers backgrounds were in the financial end of business. Yet both had built successful companies, albeit in decidedly different styles.


Goldcorps strategy is to enhance long term shareholder value through acquisitions of superior assets. Our goal is to be a low cost gold producer with geographic diversification operating in accord with our neighbors and the environment.

Telfers ventures prior to Wheaton had their ups and downs. Telfer had helped elevate TVX Gold from speculative stock-play to respected producer. In the wake of that success, he entered into an Internet venture linking investors with small Canadian gold miners. Yet as with a lot of other dot-coms of the day, it went bust. Seeking to reverse his fortunes, Telfer teamed up to find a promising gold property. A $5.5 million investment by Telfer, Frank Guistra, Neil Woodyer, Pierre Lassonde, and Gene McBurney bought control of Wheaton River, in May 2001. Telfer was named chairman and CEO.

Wheatons largest existing asset, Golden Bear mine in northern British Columbia, was nearly depleted, so Telfer spent two years buying various mining interests in Mexico, Argentina, and Australia. Nevertheless, a corresponding jump in gold prices was required for the endeavor to claim success.

Telfer got the price rally he needed: profits and market capitalization skyrocketed. Still, Telfers name was linked to his earlier failure. To enhance Wheatons image, Telfer moved to merge with Toronto-based Iamgold Corp. in the spring of 2004. Unfortunately, piggybacking hostile takeover bids and shareholder resistance scuttled the deal.

Meanwhile, in December 2003, Goldcorp was trading at record highs, aided by a gold price in excess of $400 per ounce. Later, when the company sold off gold reserves and its top officer dumped about 39 percent of his stake in Goldcorp, shareholders grew edgy.

McEwen said the reserve sell-off was in response to pending Canadian tax law change in regard to bullion. As far as parting with his own shares in the company, McEwen pointed to family obligations as the precipitating cause. Canadian Business reported that behind the scenes McEwen was pursuing sale of the company.

Prolonged negotiations with Glamis Gold failed to bring a deal to a close. Consequently, McEwen turned his attention elsewhere. He had been captivated by the Wheaton story, as told by Telfer, at a Canadian Institute of Mining, Metallurgy and Petroleum event in the fall of 2004. In December, Goldcorp announced its bid for Wheaton.

When Glamis responded with its hostile takeover bid for Goldcorp, Telfer and McEwen joined forces to convince shareholders, particularly institutional shareholders, to support the Goldcorp/Wheaton merger. In January 2005, McEwen launched a web-based war of words against Glamis. In February, the Goldcorp board rejected a sweetened deal, John Gray reported for Canadian Business. Goldcorp shareholders, the recipients of a special dividend, then approved the Wheaton deal.


At the start of 2005, Goldcorps Red Lake and Wharf mines were producing 600,000 ounces per year. The Wheaton River deal, completed in April, pushed gold production to more than one million ounces. The stellar year continued. In June Goldcorp acquired a Mexican gold project; combined with an existing Los Filos property, Goldcorp aimed to put the largest gold mine in Mexico into operation in 2007. In the second half of the year, Goldcorp announced agreements to buy Placer Dome properties from Barrick Gold Corporation as well as Virginia Gold Mines, with its Eleonore gold exploration project in Quebec. The rash of purchases would catapult Goldcorp into the ranks of the top five gold mining companies worldwide and the top three in North America. Revenues hit $896.4 million for 2005, up from $191 million the prior year. The company also posted record net earnings, $286 million versus $51 million in 2004.

As for 2006, Goldcorp was not planning to replicate the prior year, at least in terms of acquisitions. We will be slowing things down. Our objective was to get to two million ounces and were now there, Telfer told the Globe and Mail.

Telfers resolve did not last long. In September 2006, Goldcorp made an $8.6 billion offer to buy its once hostile suitor, Glamis. Although this time the deal was friendly, controversy abounded. Mr. McEwen was the most vocal critic, claiming the deal was overly dilutive for Goldcorp shareholders and would see too much of Goldcorps cash directed toward risky development projects, Wendy Stueck reported for the Globe and Mail.


Goldcorp is established as an investment fund.
Rob McEwen sets out on road to transform fund into operating company.
Red Lake Mine shows signs of promising returns.
In a risky bet, company posts its proprietary mining information online, which leads to rewarding innovation.
Goldcorp merges with Wheaton River Minerals Ltd.
Company engages in second largest gold deal to date.

Glamis reported record gold production of 434,010 ounces during 2005 and doubled its revenue. The Glamis mine portfolio included sites in Mexico, Central America, and Nevada. However, Goldcorps biggest noninstitutional shareholder wanted a voice in whether it was wise to buy a company so keen on exploration. According to the agreement, only Glamis shareholders got a vote on the deal. McEwen, who still held about 1.5 percent of the company he founded, took his fight to the courts and lobbied shareholders for support.

The proposed all-stock purchase would rank as the second largest gold deal ever, behind Barrick Gold Corp.s $10.4 billion acquisition of Placer Dome Inc. Goldcorp shares dropped 27.7 percent in the wake of the announcement of the deal, Canadian Business reported in October 2006.

McEwen said he would sell his Goldcorp shares if the Glamis deal proceeded. The price of gold, of course, would factor into the timing. Very early in November, gold sold for about $629 per ounce, off 12 percent from the 2006 high of $721.50 on May 11, according to Americas Intelligence Wire. McEwen, who vacated his management position and board seat at Goldcorp following the Wheaton purchase, was still an active participant in the industry, holding an ownership share of U.S. Gold Corp., an exploration company based in Colorado.

In October 2006, Glamis shareholders approved the deal. The Ontario Superior Court of Justice shot down McEwens appeal of a lower court ruling in November, allowing Goldcorp to complete the acquisition. The court found Goldcorp in compliance with all applicable business laws in the construction of the deal. Telfer took the chairmanship of the combined companies, and Glamiss top officer, Kevin McArthur, succeeded him as president and CEO.

Goldcorp posted annual earnings of $408.3 million in 2006, up 43 percent. Revenue climbed 91 percent to $1.71 billion. The company planned to spend $120 million on exploration of its own properties during 2007, Canadian Business reported. Goldcorp predicted production of 2.6 million ounces of gold at an average cash cost of $150 per ounce for the year.

The expanded Goldcorp held 11 mining operations and seven development projects. The Barrick and Glamis deals served to boost the companys gold reserves and resources from five million to ten million ounces. Goldcorp had set its sights on a 50 percent increase in production over the next five years.

Kathleen Peippo


AngloGold; Ashanti; Barrick Gold; Newmont Mining.


Bresnick, Julie, Glamis Bid May Foil Wheatons Goldcorp Plan, American Metal Market, December 17, 2004, pp.1+

, Goldcorp, Wheaton River Agree to Tango , American Metal Market, December 7, 2004, p. 5.

Goldcorp Completes Acquisition of Glamis Gold, Americas Intelligence Wire, November 4, 2006.

Goldcorp 4Q Earnings Fall 35 Percent with Special Items and Higher Mining Costs, Canadian Business Online, March 8, 2007.

Gray, John, McEwen Abandons His Campaign, Canadian Business Online, November 7, 2006.

, My Last Boom, Canadian Business, February 28March 13, 2005, pp. 28+

Hendawi, Hamza, and Qassim Abdul Zahra, Goldcorp Inc. Founder Will Sell if He Loses Battle: Opposes Glamis Takeover, Americas Intelligence Wire, November 4, 2006.

Stueck, Wendy, Goldcorp CEO Shoots Down Critics of Deal, Globe and Mail, September 2, 2006, p. B5.

Wahl, Andrew, Most Innovative CEO 2006: Rob McEwen, US Gold Corp., Canadian Business, October 9, 2006.

Wong, Craig, Goldcorp Looks to the Drillbit for Growth After Year of Acquisitions, Canadian Business Online, March 8, 2007.

, Goldcorp Says Rush Is Over, Will Slow Down, Globe and Mail, March 7, 2006, p. B3.