November 14, 2012 / 5:59 PM / 6 years ago

Goldcorp hopes for El Morro permit next year

SANTIAGO (Reuters) - Goldcorp Inc (G.TO) hopes its embattled $3.9 billion El Morro copper-gold mine in Chile will receive a new permit within the next year, Chief Executive Chuck Jeannes told Reuters on Wednesday.

Chile’s Supreme Court in April upheld the suspension of an environmental permit for the Canadian company’s El Morro project, in one of the biggest legal blows to a mine in the country.

An appeals court had struck down El Morro’s environmental permit in February at the request of an indigenous agricultural community.

“We’re hoping that (the new permit) happens within the next year,” Jeannes said on the sidelines of a conference on mining security in Santiago. “One of the reasons I’m here is to talk to government officials. El Morro is a very important project for us.”

Jeannes declined to comment on when Goldcorp expected first production from the project, which is 70 percent owned by his company and 30 percent owned by smaller competitor New Gold Inc (NGD.TO). The partners had supposed that building of the mine would start in September and that it would begin production in 2017.

The mine is expected to produce about 200 million pounds of copper a year and more than 210,000 ounces of gold for Goldcorp.

“El Morro was a very good project ... I think it would be something positive” if they got the permit at some point next year, Salman Partners analyst David West said.

Delays could affect the project’s capital expenditure, he added.

“My guess would be (that production starts in the) second half of 2018 ... There are probably going to be a few delays even in the building of it,” West added.

El Morro, high in the Andes of Chile’s arid Atacama region, also faces energy problems.

“Power is not readily available for the project, so we have to find out what will be our energy supply,” Jeannes said.

A host of mining projects in Chile’s Atacama region are seen particularly at risk after the Supreme Court rejected Brazilian billionaire Eike Batista’s planned $5 billion Central Castilla MPXE3.SA plant in August, analysts say.

The government faces mass protests as Chileans demand a bigger share of copper earnings, and some critics charge that a regulatory vacuum has emerged, allowing opposition groups to challenge approved plans for hydropower projects in Patagonia and thermoelectric plants across the country.

The Huasco Altinos indigenous group, which has opposed the El Morro project, argues the mine would harm livestock, restrict scarce water supplies and infringe on sacred and ancestral lands.


Goldcorp’s 2012 production should be between the previously forecast 2.35 million to 2.45 million gold ounces, Jeannes said.

“We do expect a much stronger fourth quarter. The fourth quarter will be our best,” he added. “Between 650 and 750 thousand ounces (of gold in the quarter) would get us within that (annual output) range.”

The miner’s three major construction projects are going well, he added.

Goldcorp briefly surpassed Barrick Gold Corp (ABX.TO) as the world’s biggest gold miner by market capitalization last week, even though Barrick owns more mines and produces far more gold than its growth-focused peer.

“No champagne corks were popped when that happened. It happened as a result of a reduction in their value due to some issues that they have, as opposed to something that we did particularly positively,” Jeannes said. “Market values ebb and fluctuate ... It happened last week, it could happen again, who knows.”

Shares of the Vancouver-based miner were down 0.68 percent at C$42.25 in midday trading on the Toronto Stock Exchange. (Reporting by Alexandra Ulmer; Writing by Alexandra Ulmer and Anthony Esposito; Editing by Lisa Von Ahn)

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