Goldcorp eyes fresh luster for its treasure chest

* Goldcorp makes $3.4bln bid for Andean Resources

* Company has doubled gold output in the last five years

* Argentina’s Cerro Negro project is key to Andean deal

* CEO “wouldn’t be surprised” to find more reserves there

By Julie Gordon

TORONTO, Sept 3 (BestGrowthStock) – By adding Andean Resources
(AND.AX: )( ) to its growing bundle of acquisitions,
Canada’s Goldcorp (G.TO: ) will put itself in a solid position to
achieve its goal of doubling bullion production by 2018.

Through its aggressiveness, Goldcorp has grown from a
junior miner with revenues of $70 million in 2000 to the
world’s No. 2 gold company by market capitalization, with 2009
annual revenue of more than $2.7 billion.

Its gold production has doubled from 1.15 million ounces in
2005 to 2.4 million ounces in 2009, with gold reserves more
than tripling in the same five years.

“This is a market that pays for growth,” said Dundee Wealth
Management analyst Paul Burchell. “Gold companies that can
demonstrate to shareholders that they have the better growth
profile with high-quality assets are the ones that are rewarded
the highest premiums.”

Goldcorp, known for its energetic acquisition strategy, on
Friday agreed to buy Argentina-focused Andean Resources for
C$3.6 billion ($3.4 billion) in cash and shares, beating out a
rival bid by Eldorado Gold (ELD.TO: ).

In February, the Vancouver-based company bought Canplats
for C$306.6 million ($294.8 million). That same month, Goldcorp
purchased a 70 percent interest in the El Morro copper-gold
project in north-central Chile for about $513 million.

With the Andean Resources deal, Goldcorp will get a 100
percent stake in the Cerro Negro gold project in the southern
Argentine province of Santa Cruz.

The project is slated to begin production in late 2012 and
has indicated resources of 2.54 million ounces of gold.

For Starmine data:

For main story: [nSGE6820BF]


Goldcorp CEO Chuck Jeannes said that while the company had
followed the project for two years, it was recent drilling in
the Mariana Central zone that had prompted the deal.

“We aren’t buying Andean for a 3 million ounce resource,”
he said in an interview with Reuters. “We wouldn’t be surprised
to see the indicated resource double in fairly short order.”

But Maison Placements analyst John Ing said Goldcorp may
have been a bit too ambitious in the premium they were willing
to pay for Andean, when the actual size of the additional gold
deposits is not yet known.

“I think that by paying $1,200 an ounce, they are making a
big bet that there could be a doubling or tripling of ounces,”
said Ing. “And while that is a possibility, only God knows
what’s in the ground.

Betting big has paid off for Jeannes, who took over the
company when former CEO Kevin McArthur retired.

In his 20 months as CEO, Jeannes has focused on a strategy
of upgrading Goldcorp’s portfolio by offloading non-core assets
and investing in assets he sees as key to the future of the

Cerro Negro “will be core for our company for a long time
to come,” he said. “We just aren’t finding that many new,
high-quality gold deposits out there, which is one of the
reasons why multiple parties were interested in this one.”
($1= $1.04 Canadian)
(Reporting by Julie Gordon; Editing by Frank McGurty)

Goldcorp eyes fresh luster for its treasure chest