TORONTO (miningweekly.com) – Canada's second-biggest miner, Goldcorp, will not sell shares to bolster the company's balance sheet, although it might consider an equity offering to fund potential acquisitions, CEO Chuck Jeannes said on Thursday.

“I get asked all the time, are you going to do an equity deal? The answer is no – we don't need to do an equity deal,” he told analysts at a briefing in Toronto.

Several of the company's peers in Canada, as well as Denver-based Newmont Mining, have announced share sales over the last six months.

The exception is gold number-one Barrick Gold, which sold $750-million in debt securities in March.

“Yes, we have grown over time, using our shares for acquisitions. That is part of our strategy, and it is the way that you need to do acquisitions in our business,” Jeannes said.

“But we have been very good, I believe, at not financing the company with shares.

“We have got a very strong balance sheet, we have got strong cashflows, and we pay attention to these per share metrics.”

Goldcorp, which has mines in Canada, Argentina, the US, Mexico, Honduras and Guatemala, expects 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 the end of the first quarter, the firm had a net cash position of $157-million, and the company is expecting cash flow of roughly $1-billion a year for the next five years.

However, with $1,4-billion in capital expenditure budgeted for 2009, the company has started dipping into its $1,5-billion credit facility, Jeannes reported.

“This is as per plan...that is what it is there for,” he added.

ACQUISITIONS

Jeannes said the company continues to look for acquisition opportunities, but that any potential target would have to offer better economics than the projects already in the pipeline.

Goldcorp's main project under way is the Penasquito mine, in Mexico, where it will start commissioning the first phase of the sulphide process plant by mid-year, with the first metals concentrates targeted in the fourth quarter.

The firm is also expanding and planning further growth at its Red Lake gold camp, in Ontario, Canada, hopes to finalise financing soon for Pueblo Viejo, and is working on engineering for a new production shaft to extend the life of its Musselwhite mine, in Canada.

“These [four projects] are the drivers of our growth,” Jeannes said.

“You get to 3,5-million ounces without any new projects other than these four.”

Beyond that, the company has another strong of projects in the pipeline.

“But if we can find things that are better than some of the projects waiting in the wings to supplement our growth profile, then we will supplant them,” Jeannes commented.

“We are prepared to go out and increase the value and overall portfolio of the business by acquiring better new projects.”

BULLISH ON GOLD

Goldcorp is “extremely bullish on gold” over the long term, Jeannes said on Thursday.

From a supply and demand perspective, “there is no question that, as an industry we are producing fewer and fewer ounces every year”.

Further, there is a shortage of new, large, high-quality projects that can be justified at a gold price lower than the current environment, he said.

“So, for me, those supply and demand fundamentals are very strong for a higher price over time.”

Jeannes also expects that the global economic climate will support a high gold price, given the massive stimulus spending packages that have been approved by governments around the world.

“As we start to look out towards the end of the financial crisis, it doesn't matter whether that happens in six months, or a year or two years, at some point our thoughts will turn towards inflation.

“And that will be a very strong driver for the gold price for a long time to come.”

The spot price of gold rose above $960/oz on Thursday afternoon.

Goldcorp shares were up 3,26%, at C$43,43 apiece, by 15:08 in Toronto.

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