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Can a gold company be all things to all kinds of gold investors? Let’s hear what Goldcorp Inc. CEO Chuck Jeannes had to say at this week’s Denver Gold Forum.
“I think there’s a couple camps out there. One would be the group that continues to believe very much in gold, and in the near term, thinks gold is going up, and is very much focused on our leverage to the gold price,” Mr. Jeannes said in kicking off Goldcorp’s investor presentation.
“I think Goldcorp is a very good choice for that camp of investor. We’ve got growing production this year, our costs are declining, we have zero limitations on our exposure to gold price, no hedging, no streams on gold assets, so we give you that exposure.
“The biggest and second camp of investors are those who continue to believe in gold, but are concerned about what the price is going to do in the near and medium term, so you want to minimize your risk of holding shares while you wait for the gold price to recover – and you don’t know when that’s going to happen,” Mr. Jeannes continued.
“For that class of investor, I think Goldcorp is a really safe choice. We’re generating free cash flow even at the current prices and below, and we have one of the strongest balance sheets in the business with the only BBB+ rating.”
Well played, Mr. Jeannes, well played. But there really are two kinds of gold companies for these two kinds of investors. And Goldcorp, with all the attributes of safety Mr. Jeannes describes, belongs in the latter camp. They’re the companies (Agnico Eagle Mines is another) that had the luxury of spending a significant chunk of their investor presentations in Denver this week on the quality of their properties and their production numbers.
Mr. Jeannes politely calls the other companies’ profile levered to the gold price, but they’re the ones we can also say are burdened by peak-era borrowings. These companies have to spend most of their presentations talking about the properties they’ve sold, the debt they’ve retired, the costs they’ve cut. (Hello, Barrick Gold.)
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