VANCOUVER (miningweekly.com) – In one of the first interviews he gave after replacing Kevin McArthur as CEO of Canadian gold-miner Goldcorp, in January, Chuck Jeannes went on record with a prediction that bullion prices would beat the all-time record before the year was out.

“Thankfully, I managed to stay on the right side of that,” he said in an interview this week.

“I was pretty glad to see that happen, for sure.”

Jeannes said he expects that concern about inflation, and reaction to the weakening dollar will keep gold strong.

“I think there has been a fundamental shift on the demand side to investment demand for gold.”

There is also a renewed view of gold as an asset class.

“It's being purchased for portfolio diversification purposes, and it's even being discussed again as a currency, with the news we're hearing about diversification of various central bank reserve holdings.”

“So I think all of those things bode well for the gold price in the long term.”

Jeannes declined to comment on where the price is likely to move in the short term, commenting that short term volatility really doesn't come into the firm's budgeting and planning processes.

“But long term, I certainly wouldn't argue with those who see $1 200 to $1 500 gold in the next few years.”

FIRST PENASQUITO CONCENTRATE SOON

Work is progressing well at the new Penasquito gold/silver/copper/zinc mine, in Mexico, and the project remains on track to produce and sell the first concentrates this quarter, Jeannes said.

“And we are very close to providing news as to how that is going.”

Thereafter, the next milestone will be reaching steady state commercial operations in January.

Goldcorp still likes the idea of building a dedicated power plant in Mexico for Penasquito, and potentially for the group's other projects too, but progress on the project has been slow to date.

“The partner that we were working with has had some internal issues and slowed down their progress dramatically, so we've had to back up and look to other alternatives,” he said.

“But we still think the project makes sense, that we can shave a margin off the grid power rates that would more than pay for that kind of an investment.”

RED LAKE

Goldcorp is also “very close” to being ready with a development plan for its Cochenour project, in the Red Lake camp.

Cochenour is a high-grade deep underground deposit, and the company is looking at a handful of options to access the orebody.

It could build a new shaft or employ the existing shaft at the past-producing Cochenour mine in conjunction with either an internal winze a high-speed tram over from the Red Lake mine itself.

“And that [latter option] is actually looking like the best alternative,” Jeannes said.

Goldcorp is currently targeting at least five-million ounces from the Cochenour deposit, “but over time I expect it will grow, just like everything else in the Red Lake camp has,” he added.

At Red Lake, the company is also considering its options to mine the significant surface resources that were not included in the original mine plan.

“The challenge, of course, is how to design a surface operation that doesn't interfere with too much of the existing infrastructure.

“We could do a mega pit, if you will, but we would take out two mills and two shafts and half of Balmertown,” Jeannes commented.

Economically, it would probably make more sense to do more targeted smaller pits and some near-surface underground operations by decline.

There will likely be some news on the openpit project early in 2010, and Jeannes expects work towards surface activity at Red Lake could get under way within the next two years.

At the Pueblo Viejo project, in the Dominican Republic, in which Goldcorp owns 40% and larger rival Barrick holds the balance, development continues on schedule and the mine is on track for first gold production in late 2011.

The two companies are getting close to wrapping up $1-billion in project finance for the project, and the facility should be finalised this quarter as promised, Jeannes said.

COSTS START CREEPING

When commodity prices plunged last year, mining companies saw operating cost improvements as a result of lower prices for inputs like fuel and steel.

However, as prices start rising again, there has been some reversal of that trend, Jeannes confirmed.

“Certainly, we've seen fuel come back up, and cyanide didn't drop the way we thought it would and in fact is coming back in some places.”

“And if we see the bull market reassert itself and we see oil and gas and all the commodities that we use and have to buy become more expensive, then we will see those costs come back up.”

So far this year, however, Goldcorp is coming in below its own guidance on costs – both with and without the credits it gets for selling byproducts like silver and copper.

“That's been due both to efficient operations and some unit cost improvements,” Jeannes said.