Toronto Stock
Exchange: G
New York Stock Exchange: GG
Goldcorp Approves Pe�asquito
Mine Expansion
VANCOUVER, BRITISH
COLUMBIA, December 3, 2007 - GOLDCORP INC. (TSX: G, NYSE: GG) today provided details of a plan to
expand mill throughput by 30% at the Pe�asquito project in Mexico to 130,000
ore tonnes per day and to accelerate the project production schedule. This
expansion follows a 48% increase in proven and probable reserves announced in
June, 2007.
The expanded Pe�asquito
operation is expected to produce an average 1.7 million gold equivalent ounces
per year (approximately 400,000
ounces of gold plus silver, zinc and lead). The
new capital cost estimate for project completion amounts to $1.49 billion,
which includes approximately $450 million spent to date.
Project Summary
- Proven and probable reserves of 917
million ore tonnes, including 13.0 million ounces of gold, 864 million
ounces of silver, 2.7 million tonnes of lead and 5.8 million tonnes of
zinc.
- Average annual life-of-mine production
forecast of 400,000
ounces of gold, 31 million ounces of silver, 97,000
tonnes of lead and 189,000 tonnes of zinc.
- Initial capital cost estimated at $1.49
billion.
- Very low expected total cash cost of
negative $488 per ounce of gold, net of by-product credits.
- Net present value at discount rates of 0%
and 5% projected at $5.2 billion and $2.4 billion respectively.
"We have accelerated
the metals production profile and extended the mine life at Pe�asquito,
generating a strong rate of return in a challenging cost environment,"
said Kevin McArthur, President and Chief Executive Officer. "Our
investment in this world-class mine is well underway. The team is making
great progress toward initial oxide production in 2008 and start-up of the
milling circuit in 2009. Exploration drilling and optimization efforts
are continuing to provide excellent potential to deliver additional long-term
shareholder value."
Goldcorp is hosting a tour
this week of several of its Mexican mines and projects, including
Pe�asquito. In conjunction with the tour, the Company has posted on its
website related presentation materials, including supporting detail,
illustrations and photographs of the revised Pe�asquito project plan discussed
in this news release. The presentation can be accessed at www.goldcorp.com .
Highlights of the enhanced
project are as follows:
Pe�asquito Project Expansion
|
New Update
|
June 2006 Feasibility
|
Mine life (years)
|
19
|
17
|
Mill throughput (tonnes
per day)
|
130,000
|
100,000
|
Initial capital cost (millions)
|
$1,494
|
$882
|
Sustaining capital (millions)
|
$561
|
$327
|
Project IRR (after tax)
|
17.0%*
|
18.7%
|
NPV 0% Discount (billions)
|
$5.2
|
$3.3
|
NPV 5% Discount (billions)
|
$2.4
|
$1.5
|
|
|
|
Average Annual Payable Metal:
|
|
|
Gold (troy ounces)
|
400,000
|
387,000
|
Silver (troy ounces - millions)
|
31
|
23
|
Zinc (tonnes - thousands)
|
189
|
137
|
Lead (tonnes - thousands)
|
97
|
71
|
|
|
|
Average annual production
|
|
|
as gold equivalent (ounces)
|
1.7M
|
1.3M
|
|
|
|
Unit operating costs:
|
|
|
Mining cost per total tonne
|
$0.99
|
$0.81
|
Milling cost per ore tonne
|
$3.90
|
$2.98
|
G&A cost per ore tonne
|
$0.35
|
$0.22
|
|
|
|
Annual
total cash costs per unit
(lead as by-product) :
|
|
|
Gold
(per ounce)
|
$118
|
$125
|
Silver (per ounce)
|
$7.17
|
$4.91
|
Zinc (per pound)
|
$0.54
|
$0.44
|
|
|
|
Total cash cost per ounce gold production
(all other metals as by-products)
|
($642)*
|
($378)
|
*Giving effect to the previously announced sale of 25% of silver production,
the IRR increases to 21.3% and the total cash cost increases to negative $488
per ounce.
Metals price assumptions
as used in this update:
|
Base Case
|
Low Case
|
Spot Case
|
|
|
|
|
Gold (per ounce)
|
$650
|
$550
|
$780
|
Silver (per ounce)
|
$12.00
|
$10.00
|
$14.00
|
Lead (per pound)
|
$0.50
|
$0.40
|
$1.40
|
Zinc (per pound)
|
$0.90
|
$0.80
|
$1.15
|
|
|
|
|
Project IRR - after tax
|
17.0%
|
11.1%
|
28.9%
|
NPV 0% Discount (US$B)
|
5.2
|
3.1
|
10.4
|
NPV 5% Discount (US$B)
|
2.4
|
1.5
|
5.6
|
Capital Investment
Initial capital for the enhanced project is estimated at $1.494 billion for
130,000 tonnes per day throughput compared to the previous feasibility study
estimate of $882 million for throughput of 100,000 tonnes per day. The
enhanced production rate will be accomplished through additional equipment in
each of the two milling circuits and the addition of mobile mining equipment
needed to achieve peak requirements of 216 million tonnes of ore and waste rock
per year. Approximately 40% of the capital increase is due to changes in
project scope brought about by the growing project footprint, facilities
optimization and revised infrastructure requirements. An additional 40%
of the increase is attributable to the throughput increase, including the
addition of high pressure grinding rolls, shovels and haul trucks. The
remaining 20% is due to cost escalation since the 2006 feasibility
study.
Goldcorp has received $485 million in cash from Silver Wheaton in exchange
for selling 25% of the life of mine silver production at Pe�asquito for $3.90
per ounce of silver. This $485 million funding of the capital expenditure
program increases the project's IRR to 21.3%.
Improved Production Profile
The new construction plan calls for an acceleration of the second SAG mill
line fabrication, eliminating the 18-month delay between completion of the
first line and the start of the second. Personnel and equipment will now
be retained on site for continuous construction, thus shifting forward metals
production. The illustration below describes the new production profile,
averaging 1.7 million gold equivalent ounces per year, using $650 gold, $12
silver, $0.50 lead and $0.90 zinc:
Further
Optimization
Ongoing optimization
studies are demonstrating significant opportunities to reduce unit costs, gain
economies of scale and streamline the production schedule. Studies on
metallurgy and metals recovery are ongoing, including a pilot plant run of a
120 tonne bulk sample taken from a 600 meter decline near the Pe�asco
outcrop. Anticipated increases in recoveries are not yet included in the
project economics and have the potential to further enhance the project's
economics. In addition, Goldcorp is investigating the possibility of
constructing a power plant dedicated to its Mexico operations, and is also
investigating in-pit crushing and conveyor haulage at Pe�asquito. Exploration
results also continue to support the potential for eventual underground mining
operations. Each of these efforts will continue to be evaluated
throughout 2008 and beyond.
Project Update
The Pe�asquito project
continues to attain key milestones on its way toward on-time start-up. Pre-stripping
activities have begun on the initial benches of the Pe�asco pit. The
Pabellon-Salaverna road, which provides new and improved access for equipment
and materials deliveries, was opened to the public in September. All
towers and cable for the 400 kV power line have been installed, and the line is
expected to be energized early in 2008. The tenth water well in the
Cedros Basin was completed, contributing to a sufficient supply of water for
the project. Construction of the crusher installations, oxide conveyor,
leach pad, Merrill Crowe facility and mill foundation are on schedule. The
Company expects to produce the first gold ounces from heap leaching of oxides
in 2008 and mill start-up in 2009.
Goldcorp is the lowest-cost
and fastest growing multi-million ounce gold producer with operations
throughout the Americas. Its gold production remains 100% unhedged.
Cautionary Note
Regarding Forward-Looking Statements
Safe Harbor Statement under
the United States Private Securities Litigation Reform Act of 1995: Except for
the statements of historical fact contained herein, the information presented
constitutes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, including but not limited to those with respect to the price of
gold, silver, copper, zinc and lead, the timing and amount of estimated future
production, costs of production, reserve determination and reserve conversion
rates involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievement of Goldcorp to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, risks related to the integration of acquisitions, risks related
to international operations, risks related to joint venture operations, the
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 and
copper, zinc and lead as well as those factors discussed in the section
entitled "General Development of the Business - Risks of the
Business" in Goldcorp's Form 40-F on file with the Securities and Exchange
Commission in Washington, D.C. and Goldcorp's Annual Information Form on file
with the securities regulatory authorities in Canada. Although Goldcorp has
attempted to identify important factors that could cause actual results to
differ materially, 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.
For further information,
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