Goldcorp discusses change of plans at Cochenour, likelihood of layoffs


Goldcorp’s Cochenour project won’t move ahead as quickly as originally anticipated; the geology department is currently re-evaluating the orientation of the Bruce Channel deposit.

“Essentially, from the drill information, we’ve opened up some of the sills that will support the initial stopes and we’re seeing some of the veins with a different orientation so we’re doing some current development and additional drilling to help the geologists get that well understood,” explained Executive Vice President and Chief Operating Officer George Burns during a July 30 conference call.

“It’s really about ensuring we get the infrastructure in the right place. We’ve got a ramp that we want to ensure is in the right location and we also want to make sure the sills are properly located.”

The processing of mill feed from the first test stopes at Cochenour has been pushed back from the third to the fourth quarter of 2015.

‘Managing in a volatile gold market’

Some forecasters—like Goldman Sach’s Group Inc.’s Jeffrey Currie—are predicting that gold prices could fall below $1,000 an ounce for the first time since 2009.

“In the event that that happens, is there any business leverage pull or policies you’d change or will you just continue managing for the long-term?” asked one investor during the Q&A period at the end of the conference call.

“We’ve thought a lot about it. We always try to synthesize our business and make sure we’re prepared for a wide range of external scenarios,” said President and Chief Executive Officer Chuck Jeannes, pointing to a slide in the second quarter 2015 presentation that highlights the contingency plan for gold prices ranging from $1,200 an ounce to below $1,000 an ounce.

“…if things really get down below $1,000 and stay there for a while, you’ve got to start looking at re-configuring and shutting down mines or parts of operations to make it not in an ongoing net cash deficit.”

Another investor then addressed the elephant in the room.

“Have you done enough heavy lifting in the cost department?” he asked. “We’ve seen global mining peers start to have some pretty large layoffs to workforces to balance their costs and I’m just wondering when do you think the gold industry starts to cross that threshold?”

“You don’t have to lay people off if you didn’t get carried away hiring them in the first place,” replied Jeannes, adding that he thinks Goldcorp is a “right-sized organization.”

View Goldcorp’s Q2 2015 presentation in full.


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