Growth for the Future: Charles Jeannes at the AME BC Luncheon

By noon today the foyer outside the Stanley Park Ballroom at The Westin Bayshore, was buzzing with anticipation; delegates, exhibitors and media weren’t just hungry for their three course meals but also for the forecast on the gold sector being delivered by Charles Jeannes, President & CEO, Goldcorp Inc at the AME BC Luncheon.  In his keynote address Mr. Jeannes was bullish about the future of gold in 2010 stating he wouldn’t be surprised if the price of gold reached $1500 in the next year or two.

In an effort to support the recent earthquake victims of Haiti, AME BC began collecting donations for Canadian Red Cross, and Mr. Jeannes started off his address to the crowd of over 400 guests by proudly matching all donations raised to help the Red Cross relief efforts in Haiti at this year’s Roundup convention.

Lessons Learned

Focusing on challenges facing the gold industry, Mr. Jeannes cited Goldcorp as a model example, “Growth is simply the most important factor in creating and sustaining long-term shareholder value.” To further his point, he mentioned that “growth is an important factor to determine the success or failure of a gold company”.

Goldcorp has much to be proud of. Their five year plan called for an operating model of low costs, outstanding balance sheets, being a growth leader, low political risk, and no gold hedging. Add to this over 50% growth from their five year plan. This equates to 2.4 million ounces of gold in 2009, with an expected increase of 2.6 million ounces in 2010.

But of course, they face challenges too, including the replacement of mine reserves, and finding and acquiring new resources.

“The main attribute to Goldcorp’s success is growth out in front of us,” Mr. Jeannes remarked. “The challenge here, is maintaining it ... Ongoing success is adding ounces which is absolutely critical to success of an ongoing business.”

There’s much challenge in replacing and growing reserves. There was a steady increase and quite a large jump in the last three years for Goldcorp.

According to Jeannes, there are two key factors in acquisitions:

1.     Is there value add? Is there value for our shareholders?

2.     Does this fit your overall strategy? High quality product with low costs?

Gold Forecast

There have been many changes in the last few years as gold has moved from a basic commodity to an asset. People are looking to gold for investment purposes, financial security from economic uncertainties, and possible future inflation. As fitting with the theme of this year’s Roundup-“going for gold” was key message of Charles’s presentation and this is exactly what he plans to do.