Wheaton, Goldcorp smiling toward the altar
The mood of the WHEATON RIVER and GOLDCORP CEOs was extremely pleased with themselves when discussing the coming nuptials between the two companies. Goldcorp’s Rob McEwen and Wheaton’s Ian Telfer hosted a conference call in early December during which they received many, many congratulations on the upcoming deal.
McEwen said it was during a CIM luncheon in Toronto where Telfer was telling the Wheaton story that he thought, “This would be neat if we could talk about putting these companies [Wheaton and Goldcorp] together.” The executives met, and in McEwen’s words, “This is a winner. Hands down, there will be no peer company in the industry.”
Telfer was equally enthusiastic about the talks. “The closer we got to it the better it looked.” Calling Wheaton’s Alumbrera copper mine and Goldcorp’s high-grade Red Lake gold mine “the two anchor tenants in our mall”, his excitement was evident.
The deal involves Goldcorp offering one share for every four Wheaton shares (or about $4.29/share), and the combined enterprise would continue under the Goldcorp name. The new company will have 2005 gold production of 1.1 million ounces at a total cash cost of less than US$60/oz. Production is expected to grow to 1.5 million ounces by 2007. The combined numbers just get better: a debt-free balance sheet of over US$500 million; market capitalization just below US$5 billion; trading liquidity of over US$60 million/day; and proven and probable reserves of 10.5 million ounces of gold plus another 9.5 million gold ounces in the measured and indicated categories (all unhedged).
What’s not to like? Wheaton’s major shareholders are all onside. With one exception, the investors, analysts and journalists who participated in the conference call liked the deal. The dissenting voice was of the opinion that COEUR D’ALENE MINES’ offer for Wheaten earlier this year was a better value for shareholders.
Telfer insisted that being courted by Goldcorp or by Coeur bear no comparison. “Goldcorp is the prettiest girl at the dance,” he said. “I’m thrilled to be asked for this once-in-a-lifetime opportunity.”
The management styles of Wheaton and Goldcorp are said to be a good fit; both have demonstrated the same goal but with different timetables. Their stated aim is to be the world’s lowest cost, million-ounce gold producer. Toward that end, McEwen will become chairman and hand over the responsibilities of the CEO to Telfer. Wheaton’s Russ Barwick, with extensive credentials in Australia and the Americas, will become COO. Peter Barnes, also of Wheaton, will probably be the CFO of the new company. To round out the team the 13 Wheaton people in Vancouver and the 22 Goldcorp people in Toronto are all in the running. Both offices will remain open.
The deal is expected to close by the end of January 2005. Let’s hope the “I do’s” in this union come swiftly and Goldcorp lives profitably ever after.