Goldcorp’s New Exploration Targets: Junior Explorers
Goldcorp (CN:G, NYSE:GG) has halted grassroots greenfield exploration in favor of investing US$100-M in a portfolio of junior explorers to help them make discoveries.
CEO David Garofalo thinks investing in a junior exploration portfolio is less risky than carrying out greenfields work
“We have ceased grassroots exploration because we were not getting interesting results from that. We will conduct grassroots by proxy via the juniors with a portfolio approach. They have a discovery success rate of 1:20.”
Goldcorp plans to maintain a running US$100-M investment portfolio, cycling companies in and out based on their exploration results and opportunities that come its way. The company is looking for district-scale potential whether that be in Yukon, Canada, the Carlin Trend in Nevada, or elsewhere.
Its investments will be through private placements, rather than acquiring positions in the open market, with a preference for those companies focused on the Americas.
“We will fund early-stage projects that our geological teams think have merit. We are looking for projects with the ability to grow to 5-10 million ounces that will move the needle for us. Late-stage projects are more binary and are a case of, ‘do we want to buy it?’ Quite often the companies come to us,” he said.
The company has already deployed capital in Independence Gold (CN:IGO), which has the Boulevard project in Yukon, Canada, adjacent to the Coffee deposit Goldcorp acquired from Kaminak Gold for C$520-M in May.
Other investment recipients include Gold Standard Ventures (CN:GSV) in which it invested C$16.1-M in February 2016 to help the junior continue exploring in Nevada; and Latin America-focused Auryn Resources (CN:AUG), which it put C$35-M into in January.
“We invest in people as much as properties and we have to have some faith in the management of the juniors,” he said
The company will be a passive investor, without board seats or technical oversight or input into the exploration programes of the recipient companies. “We invest in people as much as properties and we have to have some faith in the management of the juniors,” Mr. Garofalo said.
This approach to exploration is part of Goldcorp’s 20-20-20 strategy that seeks to increase Gold production 20%, grow its reserves by 20% and reduce its all-in sustaining costs by 20%.
“We are looking for the economies of scale by growing production and cost cutting and we want to cut costs by US$250 million a year to put us in a strong competitive position. There are shrinking reserves and production [across the industry] and we think that AISC has bottomed out among our competitors. We were about two years behind them because they started cutting costs while we built Éléonore and Cerro Negro,” he said.
Goldcorp cut its HQ staff by one third last year and plans to consolidate its Vancouver offices to reduce its real estate footprint.
Recently, in an Exclusive Interview with founding President of Metalla Royalty & Streaming, LLC, Brett Heath, to discuss the importance and benefits of his new enterprise to the industry, community and stakeholders in the world of precious metals mining, funding and production, what happens and how.
Read the interview, here.
Have a terrific week.
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