2010 corporate update december
TRANSCRIPT
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December 2010
CORPORATE UPDATE
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FORWARD-LOOKING STATEMENTS
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This presentation contains “forward-looking statements”, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of Goldcorp Inc. (“Goldcorp”). Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver, copper, lead and zinc, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, hedging practices, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, timing and possible outcome of pending litigation, title disputes or claims and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Goldcorp to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions; risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold, silver, copper, lead and zinc; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes; delays in obtaining governmental approvals or financing or in the completion of development or construction activities and other risks of the mining industry, as well as those factors discussed in the section entitled “Description of the Business – Risk Factors” in Goldcorp’s annual information form for the year ended December 31, 2009 available at www.sedar.com. Although Goldcorp has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Goldcorp does not undertake to update any forward-looking statements that are included in this document, except in accordance with applicable securities laws.
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GROWING:
EFFICIENT:
STRONG:
STABLE:
GROWTH LEADER
LOW-COST PRODUCER
OUTSTANDING BALANCE SHEET
LOW POLITICAL RISK
RESPONSIBLE: FOCUS ON ALL STAKEHOLDERS
SUSTAINABLEPROSPERITY
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STRONG CASH MARGINS
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$1,200/oz
$600/oz
$0/oz$100 $115 $22 $33
$163
$305 $295 $317
$267 $294 $430$577
$540
$563$685
$869
$980
$868
$703
$610
$452 $409
$367
$1,186
YTD2009200820072006200520042003
By-Product Cash Costs Cash Margin
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INCREASING VALUE: EARNINGS AND CASHFLOW
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$1,500M
2007 2008 2009 $0M
$750M
2010*
Adjusted Net Earnings Operating Cash Flow After WC Changes
$588M
$1,270M
$866M
$397M
$651M
$440M
$1,480M
$791M
* Pro-forma based on YTD figures
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GOLDCORP: THE GROWTH CONTINUES
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2004 2005 2006 2007 2008 2009 2010* 2011* 2012* 2013* 2014*
3.7 Moz
Production Growth: 20% CAGR4
2
0
$400
$200
$0
$300
$100
Pro
du
cti
on
(M
oz)
Ca
sh
Co
st/o
z
Au actual production Au est. production (reflects the effect of San Dimas disposition)Cash costs: 2010-2014 est.
EARLY STAGE
o Red Lake O/P
o Peñasquito U/G
o Hollinger
ADVANCED STAGE
o Éléonore
o Noche Buena
o Cerro Blanco
o Camino Rojo
o El Morro
Red Lake/Cochenour
Pueblo Viejo
Peñasquito
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GROWING: A ROBUST PIPELINE
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2.4 Moz
3.7 Moz
2014
2009
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ANDEAN TRANSACTION – PORTFOLIO ENHANCEMENT
Transaction Details
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Project Overview
Rationale
Total consideration: C$3.6 billion
0.14 common share of Goldcorp or cash payment of C$6.50 per Andean share or a combination at election of shareholder up to C$1 billion in cash consideration
Cerro Negro gold project - advanced stage high grade vein system
Located in Santa Cruz province of Argentina
Resources: 2.5Moz Au and 23.6Moz Ag (Indicated); 0.5Moz Au and 3.1Moz Ag (Inferred)
Consistent with strategy – large, high quality asset in stable jurisdiction
Significant exploration upside
High grade, low cost production = growing cash flow
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CERRO NEGRO DEVELOPMENT & EXPLORATION
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Robust feasibility study results released in July 2010 Development underway with final permits anticipated in
Q4 2010 and commercial production in 2012 Significant potential to expand resources, mine life, and
production rates
Young deposit – 1st prospected in the 1990’s and high grade Eureka vein only discovered in 2007 80,000 m of drilling in calendar 2010
Cerro Negro (100% owned by Andean)
Santa Cruz Province, Argentina
El Morro (70%)Alumbrera (37.5%)
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THIRD QUARTER 2010 RESULTS
Q3 2010 Q2 2010
Gold production (oz) 596,200 609,500
Cash Costs $/oz - by-product - co-product
260429
363448
Adj. net earnings ($ millions) 231.5 198.8
Cash flow from operations ($ millions)* 470.6 387.9
Adj. earnings per share ($/sh) 0.31 0.27
Cash flow per share ($/sh)* 0.64 0.52
*before changes in WC
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STRONG: OUTSTANDING BALANCE SHEET (AS OF SEPT. 30, 2010)
Cash
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$732M
Convertible senior notes $862.5M
Available debt facility $1.5B
Average annual cash flow over next 5 years ~$2.0B**
Debt : Total capitalization < 0.04 : 1
Excellent liquidity
*Market value as of Sept. 30/10**Price Assumptions: 2011 – 2014: Au - $1100/oz; Ag - $17.00/oz; Cu - $2.75/lb; Zn - $0.80/lb; Pb - $0.80/lb; Oil - $85/bbl
Marketable securities & investments $1.7B*
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DELIVERING SHAREHOLDER VALUE
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$0.27
2004
$0.80
2009
(1) Adjusted earnings per share (2009 reported earnings per share is $0.33 per share) (2) Cash flow before changes in working capital (3) Reserves and resources for gold and silver (silver converted at 55x ratio)
Earnings/Share (1)
(US$/share)Cash Flow/Share (2)
(US$/share)Reserves/Share (3)
(ounces/1,000 shares)Resources/Share (3)
(ounces/1,000 shares)
+196% +204% +253% +346%
$0.53
2004
$1.61
2009
28
2004
99
2009
41
2004
183
2009
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CASHFLOW PER SHARE GROWTH (10E - 12E)
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0%
Newmont BarrickKinross
20%
30%
40%
50%
10%
Source: Based on industry analyst consensus
Goldcorp
60%
Agnico
50%
39%
10% 9%
-2%
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STABLE: LOW POLITICAL RISK PROFILE
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CANADA
Red Lake 3.4 675,000
Porcupine 2.8 280,000
Musselwhite 2.1 260,000
UNITED STATES
Marigold (66.7%) 1.6 120,000
Wharf 0.2 65,000
MEXICO
Peñasquito 17.8 180,000
Los Filos 5.7 300,000
El Sauzal 0.3 155,000
CENTRAL AND SOUTH AMERICA
Marlin 2.1 290,000
Alumbrera (37.5%) 1.5 165,000
2010E Au(oz)
Au reserves (Moz)
FOCUS IN THE AMERICAS
2.55 Moz2010E GOLD PRODUCTION
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PEÑASQUITO
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One of the world’s
largest new mines
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PEÑASQUITO AT A GLANCE
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17.8 million ounces gold (proven and probable)1
22-year mine life
500,000 ounces gold - average annual production2
Life of mine negative by-product cash costs
(1) See Endnote; (2) After reaching full design capacity
Significant satellite production opportunities
Noche Buena
Camino Rojo
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PEÑASQUITO - RAMPING UP PRODUCTION
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Q4/10
Q2/10
Q2/09
130,000 tonnes/day
100,000 tonnes/day
50,000 tonnes/day
THROUGHPUT
High-Pressure Grinding Rolls
SAG Line 2
SAG Line 1
Q2/11
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PEÑASQUITO REGIONAL TARGETS
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RED LAKE
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The world’s
richest gold mine
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RED LAKE AT A GLANCE
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Decades of high-grade gold production; 20Mozs produced
675,000 Ounces 2010 estimated annual production
Advancing HGZ at depth
District optimization plans advancing: Cochenour, open pit
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Initial operation sized for 5 million ounces of gold
$71 million investment in 2010, including scoping study
Shaft rehabilitation (18’ dia)
5 km high speed tram (30 mths construction)
First production late 2014
U/G drilling underway
COCHENOUR – A MAJOR GOLD DISCOVERY
RED LAKE DISTRICT OPTIMIZATION
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5,000 ft -
#3 Shaft
2,500 ft -
Surface
30 L
37 L
23 L
#1 Shaft
Campbell
Complex
Reid Shaft
#2 Shaft
Red Lake
ComplexBonanza
Follansbee
Discovery
McKenzie Mine
Western
DiscoveryCochenour Mine
Inco Zones
North Zone
DDH VG13 L Marcus
Drift
Wilmar West
Granodiorite
Wilmar East
Breccia Zone
High
Grade
Zone
Party Wall ZoneDeep
Campbell
Cochenour
Rahill-Bonanza
Joint venture
Goldcorp 100%Goldcorp 100% Goldcorp 51%
Bruce
Channel
Bruce
Channel
West
Open Pit Potential
High Speed Tram
8 km
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PUEBLO VIEJO: THE NEXT GROWTH DRIVER
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9.5 million ounces gold reserves*
+25-year mine life
Q4 2011 start-up
415,000 – 450,000 ounces average annual gold production**
$485 million - capital budget 2010*
*Goldcorp interest 40%**During first full five years of operation
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$145 millionTotal 2010 exploration investment
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RESERVE GROWTH CONTINUES
5,226
2004
14,700
2005
39,700
2006
43,400
2007
46,300
2008
48,800
2009
GOLD 2P RESERVES (Koz)1
Targeting 7th consecutive year of reserve growth
(1) See Endnote
2010
?
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EXPLORATION HIGHLIGHTS
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Porcupine – Hoyle Pond success at depth
Musselwhite – New ‘Lynx zone’ discovery
Red Lake – HGZ continues at depth, lateral success
Los Filos – Substantial reserve addition & growth opportunities
Replacing mined reserves…
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ÉLÉONORE: PURE GOLD IN SAFE JURISDICTION
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Resource, +3 million Au ounces M&I; +6 million Au ounces inferred
Pre-feasibility study update by year end
330,000 oz Au*; cash costs < $400/oz
*Initial yearly average production target
+16 year mine life commencing in 2015
Exploration shaft sinking underway
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EL MORRO: EXPANDING INTO CHILE*
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4.7 million ounces gold
4.0 billion pounds copper
Large, under-explored land position
Leverage Goldcorp’s large mine development expertise
Updating 2008 feasibility study
*Goldcorp interest 70%
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ADVANCING NEW PROJECTS
Complete HPGR circuit commissioning at Peñasquito
Complete scoping studies at Cochenour and Noche Buena
Pre-feasibility study update at Éléonore
Updated feasibility study at El Morro
Prepare to advance Cerro Negro following closing
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We’re bullish on gold
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MINE SUPPLY IS DECREASING
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Source: GFMS for historical production, 2010E, 2011E
TOTAL MINE PRODUCTION
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010e 2011e 2012e2200
2300
2400
2500
2600
2700
To
nn
es
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GLOBAL GOLD DEMAND IS INCREASING
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Source: CPM Group (Gold holdings consist of consumer physical holdings)
GOLD HOLDINGS
Gold holdings < 0.7% of Global Financial Assets ($205.2 trillion)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009e 2010p0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
US$T
rillio
ns
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DELIVERING SUPERIOR RETURN
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(1) Peers include Barrick, Newmont, Kinross and Agnico(2) Source: Bloomberg data Dec. 1/00 – Dec. 1/10
Goldcorp +1471%
Dow Jones Index9%
Peers(1)
+654%
Philly Gold/Silver Index+347%
Gold Price+415%
2000
2001
2001
2001
2002
2002
2002
2003
2003
2004
2004
2004
2005
2005
2005
2006
2006
2006
2007
2007
2008
2008
2008
2009
2009
2009
2010
2010
-20%
180%
380%
580%
780%
980%
1180%
1380%
1580%
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GROWTH LEADER
LOW-COST PRODUCER
OUTSTANDING BALANCE SHEET
LOW POLITICAL RISK
A SUPERIOR INVESTMENT PROPOSITION
RESPONSIBLE MINING
Base PriceChange Increments
CFPS($/share)
By Product Cash Costs ($/oz)
FCF ($mm)
Gold Price ($/oz) $1000 $50 $0.14 $1 $103m
Silver Price ($/oz) $16.00 $1 $0.02 $5 $16m
Copper Price ($/lb) $2.75 $0.50 $0.04 $18 $27m
Zinc Price ($/lb) $0.80 $0.10 $0.02 $4 $13m
Lead Price ($/lb) $0.80 $0.10 $0.02 $3 $11m
Canadian Dollars 1.05 10% $0.05 $20 $83m
Mexican Peso 13.00 10% $0.02 $6 $21m
Oil Price ($/barrel) $80 10% $0.01 $2 $8m
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APPENDIX A - 2010 SENSITIVITIES
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APPENDIX B - OPERATING COSTS BREAKDOWN
Consolidated
Canada / USA CA & SA Mexico
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24%
17%
7%9%
10%
15%
2%
4%5%
7%
Labour Contractors Fuel Costs Power Maintenance Parts Consumables Tires Explosives Site Costs Others
15%
8%
8%
11%
13%
20%
2%4%
4%
15% 13%
19%
10%
10%10%
17%
3%
7%
5%6%
38%
20%
4%
7%
8%
10%
1%2% 5% 3%
1. Total cash costs are defined as cost of sales divided by ounces of gold and silver sold or pounds of copper sold. The calculation of total cash costs per ounce of gold is net of by-product sales revenue (by product copper revenue for Alumbrera; by-product silver revenue for Marlin at market silver prices; and by-product silver revenue for Luismin of $3.95 per silver ounce sold to Silver Wheaton). Goldcorp has included a non-GAAP performance measure, total cash costs per gold ounce, throughout this presentation. Goldcorp reports total cash costs on a sales basis. In the gold mining industry, this is a common performance measure but does not have any standardized meaning, and is a non-GAAP measure. Goldcorp follows the recommendations of the Gold Institute standard. Goldcorp believes that, in addition to conventional measures, prepared in accordance with GAAP, certain investors use this information to evaluate Goldcorp’s performance and ability to generate cash flow. Accordingly, it is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP
2. All Mineral Reserves and Mineral Resources have been calculated as at December 31, 2009 in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101, or the AusIMM JORC equivalent. Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Goldcorp’s Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. Calculations have been prepared by employees of Goldcorp, its joint venture partners or its joint venture operating companies, as applicable, under the supervision of Maryse Belanger, Director Technical Services. Reserve calculations incorporate current and/or expected mine plans and cost levels at each property. Varying cut-off grades have been used depending on the mine and type of ore contained in the reserves. Goldcorp’s normal data verification procedures have been employed in connection with the calculations. For a breakdown of Reserves and Resources by category and for a more detailed description of the key assumptions, parameters and methods used in calculating Goldcorp’s Reserves and Resources, see Goldcorp’s Annual information Form/ Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
3. Goldcorp’s exploration programs are designed and conducted under the supervision of Charlie Ronkos, Vice President, Exploration of Goldcorp. For information on geology, exploration activities generally, and drilling and analysis procedures on Goldcorp’s material properties, see Goldcorp’s Annual Information Form/Form 40-F on file with Canadian provincial securities regulatory authorities and the U.S. Securities and Exchange Commission.
ENDNOTES
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