TORONTO (miningweekly.com) - Canada's second-biggest gold-miner, Goldcorp, will produce the first concentrate at its $1,6-billion Penasquito mine, in Mexico, by the end of 2009, and remains “on track in all respects” to complete the project on time and within budget, CEO Chuck Jeannes said on Thursday.

Once completed, Penasquito will be the largest mine in Mexico, producing an average of 400 000 oz/y of gold, 31-million ounces a year of silver, 189 000 t/y of zinc and 97 000 t/y of lead, over a 19-year mine life.

Goldcorp poured the first gold from the leaching of oxide ore at the mine in May last year, and the next milestones at the operation are mechanical completion of the sulphide process plant, which is scheduled for mid-2009, first concentrate production by year-end, and then – if all goes to plan – commercial production early in the New Year, said COO Steve Reid.

The primary crusher is scheduled for commissioning in March.

Goldcorp, which has mines in Canada, Argentina, the US, Mexico, Honduras and Guatemala, is aiming to increase total production by more than 50%, to 3,5-million ounces by 2013, and is studying new mines and expansions in Canada, as well as the Pueblo Viejo project, in the Dominican Republic, that it will develop with partner Barrick Gold.

At Penasquito, the company is also crunching the numbers for building an independent gas-fired power plant, that would reduce and stabilise costs at the operation.

Goldcorp is working with an independent power provider and putting a final feasibility study together for the 202 MW plant, that would supply about 180 MW to Penasquito at full capacity.

“It still looks like a very solid project for us,” Jeannes said.

The company currently receives power from the local utility, which adjusts its tariffs monthly, and the proposed gas-fired plant could produce life-of-mine cost savings of as much as $200-million.

FOUR-FIGURE GOLD PRICE

Jeannes, who took the reins at Goldcorp late last year from Kevin McArthur, said on Thursday he remains

“very bullish” on the gold price, and expects to see further increases in the coming year.

Declining global production levels and the volatility in financial markets should drive the price “well into the four-figure range in 2009 and beyond”, he told analysts and investors.

Goldcorp said in October last year that it was reviewing and curtailing its capital spending plans, because of volatile market conditions and low metals prices.

However, with bullion prices now comfortably above $970/oz, the company will have some room to revisit its capital expenditure plans throughout the year, O'Brien said.

The firm is also still looking at plans to build an openpit mine at its Red Lake camp, in Ontario, and is exploring other targets in the area, including the Bruce Channel discovery, that it bought last year by acquiring explorer Gold Eagle Mines, Reid said.

Goldcorp shares declined 4,2% on Thursday, when the firm reported fourth-quarter and year-end results, to C$39,14 apiece by 16:15 in Toronto.

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