Gold mining news: On Monday, Goldcorp Inc. (USA) (NYSE:GG)’s Chief Executive Chuck Jeannes told Reuters, that the firm has not ruled out new takeovers and could even invest in large capital-intensive gold-mining projects. Such an operation is bound to alarm investors, since the drop in gold prices and the spike in costs has taken its toll on the company’s cash flow. Although competitors have been hit by the same problems, Goldcorp has avoided excesses during the last round of mining deals and saved enough cash to complete the proposed investment.
Currently, the firm is focusing on completing three projects that will boost gold production over the following five years. However, Jeannes also explained that the company is looking for new opportunities. “Perhaps if our peers are not looking at things, that, gives us a better opportunity,” he told Reuters.
The world’s largest gold producer, Barrick Gold Corporation (USA) (NYSE:ABX), for example, has made it clear that has no plans to build new mines until the market recovers. The deal the firm made in 2011 with the African-based copper miner Equinox, and the cost increments experienced at the Pascua-Lama mine along the Argentine-Chilean border, made shareholders angry. Other gold miners have also maintained a low profile, as they wait for further market developments before making any decisions.
Regarding new mine acquisitions, Goldcorp will most likely face opposition from investors as its competitors. However, Jeannes is confident the firm will only acquire quality assets, focusing primarily on cost, size, mine life, and location in order to seek out an investment that offers good returns. According to the Chief Executive, “If all that happens, and it’s still a big capital number, but we’re confident in all the other criteria, then that’s not a factor that’s going to stop us from going forward”.
Despite Jeannes’ optimism, lately, different operational issues have been troubling the firm. The Peñasquito mine in Mexico has been suffering problems, and the El Morro project in Chile had to be suspended in 2012 due to permitting issues. Nevertheless, after surpassing Barrick’s market capitalization, Goldcorp might just take the risk of making a large capital investment. Check back here for more gold mining news updates.
Disclosure: Pablo Erbar holds no position in any stocks mentioned