VANCOUVER (Reuters) - Goldcorp Inc (G.TO) Chief Executive Chuck Jeannes said on Thursday he was disappointed the company failed in its takeover bid for Osisko Mining Corp (OSK.TO) but not overpaying for the smaller Canadian miner was the right thing to do.
Jeannes said Goldcorp, which let its C$3.6 billion ($3.28 billion) offer for Osisko lapse last week in the face of a higher, rival bid, does not feel pressured to make another acquisition. But Goldcorp also will not let good opportunities pass by.
“In our business we are always depleting our existing resources and we have to replace those resources and we always look for opportunities and will continue to do that,” he said in an interview after Goldcorp, the world’s second-biggest gold miner by market value, released quarterly results.
In the past two years, several of the world’s biggest gold miners, including Barrick Gold Corp (ABX.TO) and Kinross Gold Corp (K.TO), have taken billions of dollars in writedowns for acquisitions made at heady prices as bullion rose for a decade. Since late 2011, the price of gold has dropped by a third to below $1,300 an ounce.
Cost-cutting, a focus on profit and even in some cases lower production have now replaced a growth-at-all-costs mantra. But the pendulum may be swinging too much away from expansion, Jeannes said.
“It’s funny how with a drop in the gold price so many of our peers have started talking about growth as if it’s a bad word.
“We certainly continue to believe that ... quality growth is the best way to add value for our shareholders,” he said.
Earlier on Thursday, Goldcorp reported a 17 percent drop in adjusted earnings to $209 million, or 26 cents a share, due to a weaker gold price. The results were, however, ahead of analysts’ expectations and Goldcorp’s stock edged up.
The stock, which is up 17 percent this year, closed 0.2 percent higher at C$27.12 on Thursday, a day when most of its peers were weaker.
The Vancouver-based miner said it is making progress in talks to restart production at its Los Filos mine in Mexico. The mine is expected to contribute about 10 percent of Goldcorp’s production this year.
“I would be very disappointed if we don’t settle this by the end of the quarter,” Goldcorp Chief Operating Officer George Burns said on a conference call.
Goldcorp suspended operations at Los Filos on April 1 after failing to negotiate a renewed occupancy agreement with an organization of local landowners known as an ejido.
Overall, Goldcorp’s first-quarter gold production was 679,900 ounces, up from 614,600 ounces a year earlier, and the average realized gold price dropped to $1,297 an ounce, from $1,622 an ounce. All-in sustaining costs dropped 26 percent to $840 an ounce.
Additional reporting by Allison Martell in Toronto; editing by Andrea Ricci and Matthew Lewis