 TORONTO (miningweekly.com) – Goldcorp founder Rob McEwen is standing by his forecast that the price of gold will reach $2 000/oz by the end of 2010, he said on Monday.
While it may still seem a stretch from current levels of around $1 135/oz, it should be noted that McEwen has been making the prediction since at least March 2006. At that time, prices for the yellow metal had not topped $600/oz since January 1980.
“I have been saying for over five years: by the end of this year, we will be at $2 000 and, when the game is over for gold, it will be over $5 000 an ounce,” he said in an interview on the sidelines of the Prospectors and Developers Association of Canada's annual convention.
McEwen is the former CEO of Goldcorp, the second-biggest gold miner by market value, and is currently CEO of US Gold, Minera Andes and Lexam Explorations.
US Gold is exploring for precious metals in Nevada and Mexico, and has found what it could be a significant silver discovery, the El Gallo project, in Mexico's Sinaloa state.
The firm should have its first resource estimate on El Gallo by midyear, and expects to complete a prefeasibility study by the end of 2010, McEwen said.
BIGGER, BUT NOT BETTER?
There has been a lot of chatter at this year's PDAC event about looming merger and acquisition activity, with Pricewaterhouse Coopers calling for a “blockbuster year" in mining merger and acquisition as cash-flush companies seek to add to their resources and production.
But McEwen cautioned that acquisitions are no good unless they result in an increased share value.
“The real danger most companies face is an investment banker comes along and says you can get this much bigger if you take over that company and everybody thinks: 'well, I'll get all this press, and maybe I'll get a bigger salary'.
“And the shareholder is sitting there saying, 'what am I going to get?'.”
If the transaction does not result in an increase in the share price, the executive of that company should not do it, he asserted.
“When you are in the position of being a shareholder, you are looking at it and saying, “I want a higher share price - I didn't buy it to have a company with a bigger top line and a lower share price,” McEwen continued.
“That isn't why I invest. I don't want any part of a bigger story if it means less for me.”
GETTING CROWDED
The higher gold price will likely mean a lot more marginal projects finding their way through the system, and the junior space is going to become even more confusing for investors, McEwen said on Monday.
“Because there are going to be that many more companies out there, all saying the same thing.
“Walk around [the PDAC convention trade show], put a paper bag over your head, stop in front of any booth and you will hear exactly the same story,” he commented.
“They're exploration stories, they're all dreams, people are passionate about them.
"Some will work. Some won't."
The junior market does represent the best place to get the biggest lift on investors' dollar, he added.
“But you have to be a little more educated about your stories, and you have to recognise there is risk.”
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